-CT News Bureau

Tax

Bengaluru, July 11: Ever since the new Narendra Modi-led government assumed office, it has shown its interest in making the country technologically advance The keenly awaited financial budget was welcomed by the industry majors like MAIT and NASSCOM, especially the decision to reduce customs on telecom products and setting up of smart cities.

The Manufacturing Association of Information Technology (MAIT) welcomed the change in the duty structure.

Amar Babu

“MAIT welcomes the long pending correction of inverted duty structure from the IT Hardware sector perspective. Also, some telecom products (non-ITA) have been made liable to 10% basic customs duty whereas all goods required for manufacture telecom products would continue to enjoy exemption from BCD. These steps will definitely help boost domestic manufacturing,” said Amar Babu, President, MAIT in a statement.

On the other hand, NASSCOM was happy that some of its suggestions were accepted by the government. “The announcements on a pan India digital initiative, funding for start-ups, district level incubator network and leveraging technology for good governance are welcome steps. These measures along with the initiatives on skilling, smart cities and ease of business, reflect the thrust on role of technology in Budget 2014,” said R. Chandrashekhar, President, NASSCOM.

NASSCOM and the industry also thanked the government for addressing key concerns raised by it on transfer pricing issues. The APA rollback, usage of multi-year data for benchmarking and other announcements should help to improve the business environment in the country.

“The budget proposal on proactively bringing a closure to the retrospective tax issue and setting-up a high-level CBDT committee should address industry concerns. There remain certain areas of concern, which could perhaps be addressed through subsequent guidelines and/or clarifications such as those related to royalty definition, Place of Provision of Service Rules,” it said.

The budget also brought smiles to the India Electronics and Semiconductor Association (IESA). “The budget is growth supportive, anti-inflationary as well as committed to fiscal consolidation and reviving growth in manufacturing. We believe the steps outlined for this sector and commitment from the industry will put India is on the journey of becoming the Design Led Electronics Manufacturing hub by attracting investments, promoting entrepreneurship and creation of jobs,” said Ashok Chandak, Chairman.

“The speed and focus of Honorable Union Minister for Communication & IT and DeitY in capturing industry needs from the electronics sector is very heartening and is a major milestone towards vision of making India an ESDM powerhouse,” he added.

The association has also released a detailed analysis of the budget considering the various factors.

Manufacturing

“Special Additional Duty (4%) on all inputs/components used in the manufacture of Personal Computers (laptops/desktops) and tablet computers is being exempted. Duty structure on imported and manufactured computers have been brought at par by withdrawing exemption of CESS (0.3%) on imported computers. E-book readers has been exempted from BCD (7.5% earlier), benefitting education and other sectors.”, a release from the association added.

The release also adds that some telecom products (non-ITA) have been made liable to 10% BCD whereas all goods required for manufacture of aforesaid telecom products would continue to enjoy exemption from BCD. This will encourage manufacturing.

Meanwhile MAIT haas recommended other far-reaching measures to boost manufacturing of IT hardware products significantly. MAIT is expecting that they will be taken up in the current year.

Market Acceleration

SMEs has been given lot of emphasis. Rs. 10,000 crores corpus proposed for venture capital to encourage start-ups and entrepreneurs in the MSME sector. All government depts. and ministries to be integrated through E-platform by 31 Dec 2014.Rs. 7060 crores have been allocated for Smart City projects. This will significantly push ICT deployment and ICT device penetration.

Cost of Doing Business

Government has initiated a number of actions including increasing FDI limit in defence and insurance sectors which will improve the investment climate. On retrospective taxes, the government has given positive statements. Finance Minister has initiated a discussion with states to work out GST-related implementation issues. Provide investment allowance at 15% for 3 yrs to manufacturing companies which invest more than Rs 25 cr in plant and machinery. Investments in roads and ports will improve infrastructure connectivity, improving the ease of doing business.