Nasscom dissapointed with budget

By Sriparna   |   Wednesday, 28 February 2007, 06:00 Hrs
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NEW DELHI: The budget 2007-08 proposal to extend MAT on export incomes, which are exempted under Sections 10A and 10B, was a disappointment for Nasscom.

It is particularly unhappy about the IT industry being taxed by the Indian Government. In a statement, Nasscom said that this could affect investors' confidence and growth in the IT sector, which is not only India's biggest exporter ($31.6 billion in 2006-07) but also the biggest employer in the organized private sector, reported a national daily.

As a solution the association recommends that the government immediately supplement the introduction of MAT with an extension of the STPI scheme (and Section 10A, 10B benefits) by 10 years. It claims that this is the 'unanimous' suggestion of the IT industry.

Nasscom also raised concerned over the selective pass-through status for venture funds and service tax on property lease, steps that will particularly affect SMEs and start-ups. The pass-through does not seem to include the BPO sector (including animation, gaming and KPO), a segment, which accounts for about three-fourths of the IT sector ventures funding.

The tax should be payable by the employee only at the time of exercising the option, Nasscom continued. Issues like transfer pricing and the method of computation of export turnover have not been addressed. The former is of particular significance with regard to attracting foreign investments in this sector.

The thrust on education, through the Sarva Shiksha Abhiyan was heartily welcomed by Nasscom, and particularly through the ambitious new scheme of one lakh fellowships each year to bright students for secondary and higher secondary education.

"With a view to further provide a boost to the knowledge sector, we particularly welcome the creation of the Vocational Education Mission, the Upgradation of ITIs and are pleased at the Rs 33 crore allocation for the new scheme constituted for manpower development for the software industry," the statement said.

Nasscom termed this allocation is a good start towards skill development, improving the talent supply and recognizing the need to strengthen the talent supply for the IT and BPO industry.

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