12 p.c. excise duty on packaged software

NEW DELHI, INDIA: Finance minister P Chidambaram today proposed to increase the excise duty on packaged software to 12 per cent from eight per cent, to bring it on par with customized software, which will attract a service tax of 12 per cent.

Service sector contributes 55 per cent of the GDP, and is estimated to grow at 10.7 per cent.

Chidambaram proposed the reduction of excise duty from 16 per cent to nil on a few items including wireless data cards.

The Budget also proposed to make some changes in the provisions of law pertaining to Fringe Benefit Tax (FBT). Crèche facilities, sponsorship of an employee-sportsperson, organizing sports events for employees, and guesthouses will be excluded from the purview of FBT.

To promote outsourcing of research, the finance minister proposed to allow a weighted deduction of 125 per cent on any payment made to companies engaged in research and development.

The Budget allocated Rs.1,680 crore to the Department of Information Technology from Rs.1,500 crore in 2007-08. A new scheme for State Data Centres was approved.

Chidambaram proposed to provide Rs.75 crore for the common service centres, Rs.450 crore for SWAN and Rs.275 crore for the State Data Centres.

The scheme for establishing 100,000 broadband internet-enabled Common Service Centres in rural areas and a scheme for establishing State Wide Area Networks (SWAN) with Central assistance are under implementation.

Chidambaram, in his speech, touched upon the financial turbulence in developed nations.

“Since August 2007, the financial markets in the developed countries have witnessed considerable turbulence that has not yet abated. The consequences for developing countries are also not yet clear,” he said.

(cmn@cybermedia.co.in)