Hiranya Ashar, CFO, Rolta India

“It will be interesting to see how our Finance Minister will balance this budget between Inflation, Growth and Deficit. He has very little room to play on direct and indirect tax fronts as it will be difficult for him to make any fundamental changes which are different from DTC and GST. I think most of the proposals on Direct Taxes will be more or less a step towards DTC. From the IT Industry’s perspective there are 3 major items which we are expecting in this budget. The first one is the much talked about extension of STPI benefits under section 10A. Though many companies and industry associations have recommended STPI benefits to continue for a longer period and to be treated at par with SEZ benefits, I think in this budget at least one more year’s extension will be extremely helpful. The issue about continuance of STPI benefits under DTC can be taken up separately when DTC is discussed and passed by the parliament. The second item is the rate at which MAT is levied. The MAT regime started with a tax rate of 7.5% of book profits and now this rate has been increased to a whopping 20%. This rate is certainly too high and has a big impact on cash flows of all companies not only in the IT sector but other sectors as well. We expect that this rate should be reduced to a reasonable rate between 15-17% and if government wants to retain 20% rate for MAT at least the name of this tax should be changed to “Maximum Alternate Tax”!!. Third major item is on the indirect tax side where there is still no clarity on how software should be taxed, whether it is services or goods and whether service tax or VAT is applicable? This issue certainly gets addressed with the introduction of GST however since there are lot of uncertainties around GST implementation, immediate clarity of this issue from the government will be highly appreciated by the industry.”