IT industry disappointed with budget proposals

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Bangalore, Feb 29 (UNI) The NASSCOM, the Bangalore Chambers of Industries and Commerce and representatives of the IT industry today termed as disappointing the ''neglect'' of the IT and ITeS sectors in the Union budget presented today.

Expressing its disappointment over absence of any discussion on extension of the STPI scheme to help the IT industry reeling under the currency crisis, the NASSCOM and the IT-BPO industry, however, welcomed the fact that the Union Budget was inclusive and had a strong focus on the social sector, NASSCOM President Som Mittal said in a release here.

''This is extremely critical for small enterprises and the BPO industry, as well as for expansion in tier-II and III cities as they are unable to avail the benefits of the SEZ scheme.

''The STPI benefits are available till March 31, 2009 and we are hopeful that through continued dialogue we will be able to convince the Government to consider our proposal and help India garner the large opportunity in this sector,'' he said.

The imposition of service tax of 12 per cent on customised software and higher excise duty on packaged software could lead to increased cost of IT and could slowdown the IT usage in the domestic sector. This impacts in particular, small and medium enterprises who have just started deploying IT,'' he feared.

BCIC President John M Panikar said ''the sector needs the continuation of the tax holiday under STPI scheme, at a time when the sector badly needs some relief in view of the hardening Rupee and the downward pressure on exports anticipated due to the global slowdown.'' He said the raising of the short term capital gains tax to 15 per cent would have a negative impact on the already volatile capital market. But the measure to reduce the general CENVAT rate was welcome.


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