Sinha chants IT mantra: India’s new mantra–IT

By : |April 9, 1999 0

Finance Minister Yashwant Sinha in his budget proposals
1999-2000 has underscored a strong point that India indeed has a
new mantra–IT. Almost everyone is chanting it.

This mantra has its roots in the “passionate and
strategic infection” spread by the unrivalled success of India’s
export-led software industry.

This infection has not only made the software sector
one of the high value-addition and net foreign exchange earning
industries, but has created history of sorts on the Indian stock
exchanges.

Its high capacity to generate wealth, foreign exchange
and employment have already caught the imagination of India’s businessmen,
citizens, economists, bureaucracy and politicians, alike.

The first feeling after listening to the budget
was “a great sigh of relief” for the software industry. The relief
came from the fact that the Finance Minister scotched all rumors
and did not withdraw any incentives enjoyed by the industry.

Software exports continue to get exemption under
Section 80 HHE of the Income Tax Act. This will help translate into
yet another 50 percent growth year for the software export industry.

As per NASSCOM estimates, the software exports industry
in the year 1999-2000 is expected to gross Rs 17,500 crore or $4
billion.

Secondly, although the Finance Minister does not
believe in concept of zero-duty regime, he has left computer software
outside the purview of customs duty. IT software continues to enjoy
zero import duty.

On the other hand the argument is, that even if
the Finance Minister had imposed duty, it would have caused problems
in its implementation, as the new methods of delivery through the
internet, almost make it impossible to impose import duty on software.

At the same time, the minister deserves adequate
accolades for boosting the domestic software market.

He has clarified that service tax is not applicable
on computer software development. This means no more hassles of
excise inspectors troubling domestic software players.

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