"Railway budget was more exciting"

PUNE: The wishlist for Budget 2008 was huge, relevant and varied. But as it turns out, disappointments ride the wave of industry’s response to Budget 2008.

Lack of attention to demand on extension of STPI scheme, which was more emphatically asked for small bracket industries is almost a unanimous voice.

“We were really expecting some announcement on the STPI regime,” as Amar M Kavir, Aztecsoft stresses.

So is the response from Sourabh Kaushal, industry manager, Frost&Sullivan, south Asia and Middle East. “We expected the Finance Minister to extend the STPI scheme and also to rationalize the fees, taxes and duties applicable on the telecom sector, but this was not even touched upon by the minister in his budget. From IT and Telecom Industry point of view, apart from few small indirect positives, it was a lackluster budget.”

Sashi Reddy, chairman, CEO of Applabs too rates non-extension of STPI scheme and the service tax on customized software as where disappointment rests. “This is not a significant move and FBT is still unaddressed. In comparison to last year, there has been a fairly large disappointment for the software industry.”

Nasscom too has aired its disappointment on the absence of any discussion on the extension of the STPI scheme. This is extremely critical for small enterprises and the BPO industry, as well as for expansion in tier 2 and tier 3 cities as they are unable to avail the benefits of the SEZ scheme. "The STPI benefits are available till March 31, 2009 and we are hopeful that through continued dialogue we will be able to convince the Government to consider our proposal and help India garner the large opportunity in this sector."

Naveen Gupta, vice president – Finance, GlobalLogic Inc. keeps his hope. “We were expecting the extension to Tax holidays for STPI. It could very well happen in post-budget announcements or in the next budget. Moreover, extending service tax on software support and maintenance is not in favor of small and medium IT companies. We were expecting some relaxation of FBT on ESOPs."

In addition, Gupta feels that the contribution of the IT industry to the buoyant Indian economy did not 'deserve' excise enhancement on packaged software and imposition of service tax on custom software.

Muthu Logan, CEO, Brovis Wireless Networks, rates the Budget as lackluster too. “There is not much excitement it this time except in patches. Corporate tax has not been touched at all which is a big letdown and for the technology sector there have been no sops. FM this time has played it safe. In fact, Railway Budget was more exciting.”

Nasscom also has other areas that highlight attention. “We have seen the advantage of IT deployment in the country. However, the imposition of service tax of 12 per cent on customised software and higher excise duty on packaged software could lead to increased cost of IT and could slow down the IT usage in the domestic sector. This impacts in particular, small and medium enterprises who have just started deploying IT.”

S Rajendran , CMO, from Acer India, feel that minor obstacles  have been put out of the way for deeper IT penetration.

“These are continuation of four per cent special additional duty, which in any case is to be refunded subject to some laborious documentation. Then there is MRP related CVD payment that has pushed up IT hardware cost by four to seven per cent. Another area is excise increase on operating system from eight per cent to 12 per cent, that has been newly introduced. Though some relief has been mentioned on Cenvat and duties for some hardware items, at this time we are not clear what are these and we will have to wait till we are able to see the particular notifications. We wish there was relief in the budget to reduce IT hardware cost and make it more affordable.”

“While the Budget does resolve some existing anomalies, we would continue our dialogue with the Government on removing the inequities and procedural issues such as those relating to provisions of Section 10AA for units in SEZ, advance pricing agreements etc.,” Nasscom said in a statement.

(cmn@cybermedia.co.in)