The Hindu Business Line : IT gets a raw deal

The Government has ignored the IT (information technology) and ITeS (information technology enabled services) sectors’ call to extend the tax holiday under Section10A of the Income-Tax (I-T) Act. The amendment expected in Section10AA for SEZ units has not been carried through. The much expected abolition of surcharge on corporates also has not materialised.

The Finance Minister has amended Section115O to enable holding companies to claim a credit for dividends received against their DDT liability. Though the benefit is limited to one level of holding, it would further the case for an Indian holding company with multiple subsidiaries.

Cenvat on packaged software has been increased to 12 per cent and reduced to 14 per cent on hardware products. Services tax is proposed to be levied on customised software. This will benefit IT exporters as they can utilise Cenvat credit of service tax paid on input services. However, this would pose a difficulty for DTA sales as VAT authorities do not distinguish customised and packaged software. Overall, the industry would be dissatisfied with Budget 2008. While a lot has been done, a lot more could have been done.

Indraneel R. Choudhury,

Executive Director,

PricewaterhouseCoopers

Auto gets a boost

Budget 2008 gives reasonable relief for the automobile industry. The presence of auto component industries in Asean countries and cheap imports from China without FTA (free trade agreement) creates serious threat to Indian auto component industries. In the Budget, Custom duty peak rate of 10 per cent has been unchanged which gives the auto component industries a level-playing field. In respect of manufacture of vehicles, excise duty reductions are significant. The Central Sales Tax is reduced from 3 per cent to 2 per cent which should also help to reduce costs.

Budget 2008, however, has not provided any big opportunity in the context of global slowdown and in attracting global investments.

Jayaraman Sekar,

Leader Auto Practice,

PwC

More Stories on : Budget | Taxation

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page