Tax hike: K'taka ready to mend fences
Thursday, 12 August 2004, 19:30 IST
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BANGALORE: The Karnataka government Wednesday agreed to discuss the recent hike in sales tax on IT software and hardware with industry representatives in the state. The decision for detailed discussions on the tax issue was taken at an hour-long meeting at the state secretariat between Karnataka Deputy Chief Minister Siddaramaiah and Wipro chief Azim H. Premji. "A meeting on the tax hike will be held in a week's time with officials of the finance and IT departments of the state," a top Wipro executive told IANS. "We will represent to the state government the cascading impact of about 140 percent hike in sales tax on software services, hardware products and peripherals being levied on the industry as part of the state budget for the current fiscal." Premji's meeting with Siddaramaiah was held as a sequel to the first meeting between the state's coalition government and captains of IT industry here Tuesday on infrastructure and policy issues, including taxation pertaining to the industry. "The state government is open to discussing the tax issue with the industry. We will explain to the officials the need to review the tax hike of seven percent (from five percent to 12 percent) on computer software, hardware and peripherals and three percent (from five percent to eight percent) on computer consumables," the Wipro official, who was present at the meeting, said. Earlier, industry representatives had criticised the sales tax hike and termed the measure a retrograde step. "By increasing the tax on hardware, software and peripherals, the total cost of ownership will go up proportionately," a representative contended. Emerging from the meeting, Siddaramaiah told IANS he had explained to Premji the government's compulsions in rationalising sales tax on IT and the logic behind the hike to mobilise additional resources. "The government is of the view that those who can afford to pay the tax, should pay. I have heard their views. I have directed my officials to hold a meeting soon with the industry representatives to see what we can do since we understand their concerns," he said. Siddaramaiah said Premji had suggested doubling the professional tax levied on IT employees to raise resources instead of taxing the sector's products and services, which will have a bearing on sales in the state. "It's a welcome suggestion. Premji is of the view that IT professionals could be taxed more as they draw handsome salaries. At the same time, he sought a review of tax on IT products and services as they were higher than in other states and this will affect the sales in Karnataka," he said. Premji, however, declined to comment on the meeting.
Source: IANS
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