Home / Industry / Infotech /  Technology sector’s expectations not met: Nasscom

New Delhi: Apex software industry body Nasscom on Monday said Union Budget 2016 did not meet the expectations of the technology industry.

While the budget reiterates the 7.6% GDP growth rate for the country and provides a slew of incentives for the rural and agricultural sectors to enable inclusive growth, it does not meet the industry’s expectation on policy announcements that “enable ease of doing business for IT sector", Nasscom said in a statement.

The IT/ITeS industry had put forward three key priorities that it wanted government to address in the budget, including increasing ease of doing business, nurturing start-ups, products and e-commerce sector and providing clarifications on transfer pricing to enable inward investments in India.

“Budget 2016 only partially covers these priorities," the industry body said.

The budget emphasized on technology adoption by the government across small and medium businesses, land record modernization, Aadhaar adoption and procurement platforms among other things, the industry body said.

Some of the key announcements in the budget under Digital India initiative included modernisation of land records, creation of digital depository to store school and college certificates, e-procurement of agricultural produce, e-platform to connect wholesale agri-markets, computerized processing of court case, information technology enablement of public services to rationalise human resources and automation of 300,000 fair price shops.

Jaitley also announced a new digital literacy scheme for rural India, which will impact 60 million additional households and e-sahyog, an online platform for income tax department to assist small taxpayers.

“The initiatives announced today combined with swift implementation of Digital India will help to digitize India and provide effective citizen services. We would urge the government to move forward at a swift pace and build an effective PPP (public-private-partnership) model," said R. Chandrashekhar, president, Nasscom.

The three-year income tax exemption for start-ups set up between 1 April 2016 to 31 March 2017 was a welcome move, though continuing MAT (minimum alternate tax) imposition was a dampener, said Nasscom.

“Extension of Section 10AA for SEZ units till 2020 is a positive outcome though the imposition of MAT on startups will not allow the full impact of the benefits to be realized," said Mohan Reddy, chairman, Nasscom.

During a Twitter chat on the budget organised by Nasscom, Ravi Gururaj, a member of the Nasscom executive council and chairperson the Nasscom’s product council, said, “while it is not fair to call out government as lackadaisical, government heart is right but policy is a slog."

Both Reddy and Chandrashekhar said that the government needs to do more for the start-ups. Key proposals which were not addressed, said Nasscom, included removal of dual levies on software products, higher tax rates for domestic investors, revision of criteria to carry forward losses to allow for capital infusion in business and transfer pricing issues related to safe harbour margins.

On research and development (R&D), Nasscom said the government’s decision to lower deduction rate is not conducive to encouraging technology R&D. This is in addition to the fact that R&D credits are not applicable for technology sector. The budget also did not provide any road map on MAT and different cess rationalization, said Nasscom.

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