The upcoming Budget for the year 2017-18 will be unique for multiple reasons and there is big expectation from every segment of the society. One of the reasons this Budget becomes even more important is that the nation is going through a big initiative of demonetisation which has impact in various size and forms. In a country like India, where 86 per cent of the transactions happens in cash, this is a bold step by the government to push the economy to a digital highway.

On IT industry

Come to discuss the IT industry and its expectations, the demonetisation had no impact as most of the business was traditionally being run cashless. However, the IT and engineering industry has been going through different challenges and would be looking forward to the upcoming Budget to get some relief and support from the government.

First and foremost is the GST, which has been a major talking point and a bone of contention between Central and State government. This week the Centre and State government have been able to come to a consensus of rolling out the GST from July 1. This common agreement on the implementation date definitely gives the industry much needed clarity and some additional time for preparation of this huge reform.

There have been concerns around the unusually high safe harbor margins (ranging 20-30 per cent) and this has to be revised to a lower rate which is more realistic based on the APA (Advance Pricing Agreement) data. Safe Harbor margins are high in transfer pricing and have not been adopted by the IT companies from India.

The software product development industry has been largely dominated by SMEs, which has been suffering with the 10 per cent. TDS levied on all software transactions, which has cascading effect. The upcoming Budget should address this issue to make sure government provides the required boost to the software product SMEs.

On start-ups

Start-ups in this country are here to stay. India has paved its way to secure third position in the world in terms of number of start-ups. By 2020, it is anticipated that India will have more than 10,000 start-ups and it will be creating employment for over two lakh professionals. To make sure that we support this budding industry, government needs to take concrete steps during this Budget. There have been concerns from Indian investor community investing into start-ups.

The long-term capital gains from sale of unlisted shares in the hands of non-residents attracts a tax of 10 per cent whereas it attracts a tax of 20 per cent in the hands of residents. This leads to domestic investors being less competitive. This has to be addressed and also as per the Start-up India action plan we suggest MAT exemption for start-ups.

Overall, industry and individuals have high expectations from this Budget and we hope to see some good initiatives that will give an additional boost to the economy and ecosystem.

The writer is Founder & Executive Chairman, Cyient and former Chairman, Nasscom

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