While the IT sector has presented an array of suggestions for the Budget 2008-09, finance minister P Chidambaram has a plateful before him. The forthcoming Budget will decide the fate of the BPO companies in India as industry awaits an extension of the STPI scheme by another 10 years to retain the competitiveness of BPO firms and SMEs.
Software industry body Nasscom has suggested the STPI scheme be extended up to 2019, as the five-year-old ITeS industry had very little time to benefit from this scheme that exempts export revenues of companies from tax. It is expected that the government may de-link IT from ITeS and extend the scheme for the latter.
On the fringe benefit tax, imposed in last Budget, Nasscom says, ?For all practical purposes, it is a surrogate income tax, collected as FBT from employer as a matter of administrative convenience and the employer in turn has a right to recover from the employees.?
Stressing the need for a stable policy regime for a robust market and industry, the IT hardware industry has suggested status-quo be maintained on IT-products in tax structures, including the continuance of a reduced excise duty of 12% on PCs.
Besides, the industry feels the recently announced abatement rates for MRP-based excise duty on IT products are much below the industry expectations and need to be revised upwards to reflect the true cost structures in the IT value chain.
According to Manufacturers Association for Information Technology (Mait), all IT products should attract the same rate of VAT across the country. Mait executive director Vinnie Mehta adds, ?The government should immediately waive central sales tax on IT products. This, while helping the government to prepare for the phase-out of CST at an overall level, would also provide a substantial boost to the PC sales in the country.?