Bangalore: The buoyant Indian IT industry Friday termed the union budget 2012-13 as pragmatic and growth-oriented but expressed disappointment over it not exempting Special Economic Zone (SEZ) income from the Minimum Alternate Tax (MAT).
“Given the current uncertain economic environment, the budget is very pragmatic and realistic. It focuses on inclusive growth, more investment in infrastructure and creating mechanism to give financial support to some of the ailing sectors of the economy,” Infosys Ltd chief financial officer V. Balakrishnan said in a statement here.
Noting that the budget proposals had no big bang reforms or changes, but maintained status quo, Balakrishnan said the move towards a medium-term expenditure framework was a good sign as it would set a three-year rolling target for expenditure indicators.
“For the IT industry, the focus on bringing transparency in public procurement will result in increased spending on IT by the government,” Balakrishnan asserted.
Echoing Balakrishnan, Tata Consultancy Services (TCS) Ltd chief executive N. Chandrasekaran said though the finance minister (Pranab Mukherjee) presented a pragmatic budget with doses of good intentions for long-term growth, the proposals lacked short-term punch to get growth going.
“For the IT industry, the request to exempt SEZ income from MAT has not been granted and this is disappointing. The focus on research and development (R&D) is good, as the weighted deduction of 200 percent for R&D expenditure in an in-house facility has been extended to over the next five years from this fiscal (2011-12),” Chandrasekaran pointed out.
Though the industry did not expect any big change in the tax regime, Balakrishnan said there was a need for clarity and certainty on the application of tax laws.
“We hope the government will provide the clarity through administrative circulars to bring in greater certainty on tax position for the industry,” Balakrishnan noted.
Observing that the budget did not spell out any date or schedule for the introduction of the long-awaited Direct Tax Code (DTC) and the Goods and Services Tax (GST), Chandrasekaran said provision of the advanced pricing agreement (APA) would be useful to ease transfer pricing litigation for the IT industry.
Infrasoft Technologies Ltd managing director Hanuman Tripathi said the finance minister should have given some benefits to the IT industry to boost the segment in light of the global slowdown in tech spending and recessionary trends in Europe and the US.
“While the Indian economy is not growing at the proposed pace and global economies are not in good shape, rise in cost of living is going to make life difficult for everyone, especially for the middle income segment,” Tripathi said.
The budget, however, will help the IT hardware and manufacturing sectors as the government will invest heavily in using technology such as smart cards, automatic teller machines (ATMs) and the Unique Identification (Aadhar) in many social sectors like the LPG distribution and payments for the national rural employment guarantee scheme beneficiaries,” Tripathi noted. (IANS)