Will FM extend STPI benefits?

BANGALORE, INDIA: Union finance minister Palaniappan Chidambaram will present the fifth Budget today.

It is a much-awaited one, as it is the last budget of the UPA government and with the election scheduled for next year, many expect it to be  populist in nature.

Many are eagerly waiting for what the finance minister has to offer for the IT industry, especially in the backdrop of rupee appreciation and US slowdown and fall of GDP growth compared to previous year.

A survey by the Indian industry body Assocham recently involving 200 CEOs on budget expectations revealed that majority of CEOs felt that Budget 2008 would favor the Aam Aadmi (common man) than the industry.

Over 90 per cent of CEOs felt that Chidambaram is likely to bring about a balancing act in his budget proposals to appease Indian industry and that there would not be any additional cess levied.

However, everyone in the industry including Nasscom is betting really hard on the extension of STPI tax holiday.

Further, there are hopes of increase in the tax slab for individual, incentives for SMEs growth, cut on indirect taxes, among others.

Techies are hoping for extension of personal income tax slab. However, majority in the IT industry demand more attention to IT and ITeS as it has fueled the Indian economic growth tremendously and constitutes over 5 per cent of the GDP.

They also have emphasized the need to focus on infrastructure and augmenting communication channels.

Few NRIs are of the opinion that the finance minister should not succumb to the election pressure and should not woo voters with a populist budget, as that would harm the economic growth and momentum.

They are looking forward for a budget that would continue to spur entrepreneurial index in India, attract more foreign direct investments and extend STPI benefits.

However, extension of STPI tax holiday is in everyone’s budget wish-list and one should wait and watch whether finance minister would fulfill the same.