Union Budget 2018: IT industry urges Arun Jaitley to address global barriers
New Delhi: Representatives of the IT industry on Monday urged finance minister Arun Jaitley to address the barriers which the domestic investors face in international markets so that they are treated on par with their foreign counterparts.
Suggestions from the representatives of IT associations like ELCINA (Electronic Industries Association of India), MAIT (Manufacturers’ Association for Information Technology) and TEMA (Telecom Equipment Manufacturers Association of India) were presented at the sixth round of pre-budget consultations. The software industry was represented by Nasscom, Infosys Ltd and Tata Consultancy Services Ltd.
“Domestic investors in the start-up ecosystem are treated differently from foreign investors and they are at a disadvantage whether in the case of angel tax or in the case of long-term capital gains tax and also the duration for which the investment has to be in place for it to be considered as long term capital gains tax,” Nasscom president R. Chandrashekhar told reporters outside the finance ministry after the meeting. Chandrashekhar completes his term in March 2018.
“Tax notices which have been issued recently to a few companies do not recognize IT services as exports because of some interpretation. The government has clarified in today’s meeting that the situation has been corrected and suitable advisories have been issued,” added Chandrashekhar.
He said issues related to Place of Effective Management (POEM), service tax, and tax refunds have also been discussed. “There were issues raised with regards to transfer pricing and the manner in which it should be treated and again the suggestion was that other than mandatorily treating the amount as a loan, there should be other options as applicable in OECD countries to be made available to the companies.”
The IT representatives (hardware and software) pointed out that considering some recent protectionist and discriminatory policies followed by other countries, the IT sector would need government’s help at policy level to ensure combat visa restrictions issues as also to ensure our economic interests, an official statement from the ministry said.
“We have asked the government that goods and services tax (GST) should be used as a tool to benefit the manufacturers bound by IT Agreement,” Pankaj Gulati, president of ELCINA, said after the meeting. He has also sought imposition of duty on those technology and telecom products which fall outside the purview of IT Agreement signed by India. Such a move would boost domestic IT and telecom manufacturing in the country, he said.
Earlier during the day, Jaitley met leading economists and said that the government have been able to achieve these fiscal targets due to focus on expenditure rationalization, plugging of loopholes in public expenditure through Direct Benefit Transfer Scheme (DBT) and the Public Financial Management System (PFMS), and by making innovative revenue raising efforts, among others.