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Union Budget Demands from The IT Industry

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IT is considered to be the most important driver of India’s next success story. So the demands from the finaice ministry from the IT industry is an important set of notes. Here are some key Budget demands from the IT Industry:

Srividya, AvaaliSrividya Kannan, Founder , Director – Avaali Solutions Pvt Ltd:

“I’m sure the startup community is all eyes and ears to Budget 2019 – there is a lot expected to further boost the startup ecosystem. There is an ongoing rationalizing happening on GST rates – it would be a key requirement to bring down the GST rates across the board for startups. Also, having policies around different classes of equities will really help founders maintain control of the company. Again, tax sops by extending the tax holiday window further to about 7 years will support startups. Like the CGTMSE scheme, allocating government funds to startups focusing on emerging and innovative technologies will further propel innovation via this sector. Startup funds and investors should have level playing field with other asset classes, more particularly listed companies.”

“In terms of personal income tax, reducing the maximum tax slab to 25% and allowing exemption for medical expenses and transportation allowance will support the employed class. Again, in the interest of boosting the start-up sector, tax on ESOP’s should be levied at the liquidity event and not at the time of exercise.”

Diwakar Nigam, Chairman and Managing Director, Newgen Software:

IT Product companies, unlike services companies, have unique requirements hence the government has to support product companies and offer incentives to boost innovation, providing a level playing field. We expect a reduction in the rate of Minimum Alternate Tax on SEZs as the current rate of 18.5 percent is quite high. We also hope that the government cuts corporate tax rate to 25 percent across the board irrespective of turnovers, in the forthcoming budget, to spur economic growth. To amplify Make in India initiative, now is the time for the government to encourage product companies by introducing incentives which help them become globally competitive and take product innovation to the next level.

Shibu PaulRegional Sales DirectorAPAC for Array Networks

“From this year’s budget we are expecting reduced duties on IT networking products. There should be a strong domestic manufacturing policy favoring global companies to invest more in India. Thebudget should reassess the preferential market access policy and ensure that honest tax paying citizens are given privilege and preference.”

Rajendra Chitale, CFO at Crayon Software Experts India Pvt Ltd:

“With initiatives like ‘Digital India’, ‘Make in India’ and ‘Personal Data Protection Bills’, Government has certainly put India on a Digital Innovation fast track. With Budget 2019, we require government to create policy frameworks that incentivize big businesses to invest in manufacturing locally in India. Further, we would also expect the Government to remove the day-today hurdles and obstacles faced in implementation of these initiatives.

Government had provided for non-deduction of withholding tax on reselling of software licenses – primarily considering the very low margins in this trade and the fact that resellers are not making any changes to the licenses purchased from the OEMs. With the changes in technology – pure play software licenses are being replaced by a bundled package – Azure, Amazon web services, etc. (Together referred to as “Cloud Services”). However, the concept largely remains the same – Resellers are not making any changes to these bundled packages and the margins are also very low. Would urge the Government to come out with specific notification to extend the scope of the term “Software” as defined under NOTIFICATION No. 21/2012 [F. No. 142/10/2012-SO(TPL)] S. O. 1323(E), DATED 13-6-2012.

Another area on implementation is to remove the bureaucracy and speed up the process of refunds – on Income tax as well VAT/ Service tax refunds.”

Sonit JainCEO of GajShield Infotech:

“We would like the budget this year to give a strong push to Make In India which may include larger tax exemption limit for employees working in companies which are manufacturing products locally in India. A strong push towards rural e-infrastructure with added emphasis on security compliance and data protection would be beneficial. Implementing zero GST set-off for companies using SaaS application hosted outside India will enforce companies to setup data centers in India thus boosting jobs as well as infrastructure. Incentives should be given for making digital payments for the additional transparency they provide. This year’s budget should promote companies manufacturing IT products locally by giving them added advantage like tax exemption or incentive on IT exports.”


SMEStreet Desk

SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.

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