Budget 2013: Reasonable and responsible, says IT industry

Terming the 2013-14 Budget as 'responsible and reasonable', IT industry body Nasscom today said the thrust by government on clarifying taxation rules, balanced growth and technology adoption are encouraging steps.

"The Budget is responsible and reasonable given the need to balance the imperatives of growth and inclusion under the constraints imposed by the current state of the Indian economy and still tepid global recovery," Nasscom president Som Mittal told reporters on a conference call.

Mr Mittal welcomed the Finance Ministry's efforts to clarify issues related to tax incentives, which have been addressed through CBDT notification.

"The clarifications on taxation rules regarding development centers and safe harbor rules are welcomed as measures to drive skill development, with a special focus on Tier II and Tier III towns," TCS MD and CEO N Chandrasekaran said.

Last year, the government had set up a panel, headed by former Central Board of Direct Taxes (CBDT) chairman N Rangachary, to address issues like approach to taxation of development centres, tax treatment of 'onsite services' of domestic software firms and those related to finalising safe harbour provisions announced in Budget 2010.

Wipro executive director and CFO Suresh C Senapaty said:" Reforms have progressed in the areas of Direct Tax Code, GST, financial markets regulatory authority for Road sector and Tax Administration Reform Commission to bring about a tax regime."

"The focus on SMEs and start-ups will definitely help to boost entrepreneurship in the country. Angel investing is critical for the country and the recommendations on structuring this through Securities and Exchange Board of India (SEBI) and providing pass through benefits is a step in the right direction," he said.

However, Nasscom expressed disappointment on issues like lack of thrust on boosting high value exports, IT sector being excluded from ambit of the investment allowance and absence of clarity on retrospective levies.

PwC India Technology leader Sanjay Dhawan said issues like increase in tax rates for 'royalty' and 'fee for technical services' to 25 per cent could have a bearing on the technology sector as well.

"This could add to the cost of doing business and in net-of-tax contracts, the tax rate could be as high as 37 per cent," he added.

Further, levy of a 20 per cent withholding tax on buyback of shares by the unlisted companies could have an impact on the sector, Mr Dhawan said.