The Budget is here

NEW DELHI, INDIA: Arun Jaitley's Budget briefcase is out and with that the technology sector finds a mention, both directly and subtly, in thrust areas ahead.

Topping the radar here is focus on simplification as well leveraging analytics that IT can bring in for taxation areas. This entails ongoing pilots as well as new emphasis for e-filing, e-sahyog (expansion of online interface to seven megacities) and other mechanisms in allowing technology to be a stronger interface as well as the way of ironing out issues in income tax space.

Jaitley also brought in the role of technology when he talked of rural schemes on digital literacy, exemption-extensions to start-ups in some areas, incentives for Make-in-India, e-platforms for farmers (about 585 mandis by 2018), digital education repositories, reduction of compliance burden, digital saksharta abhiyan, and other aspects.

Technology's indirect role is clearly palpable in many initiatives propelled in this year's Budget too.

Rahul Agarwal, MD, Lenovo India lauded some areas and observes, “We are happy that the budget establishes a strong emphasis on technology in almost all the development areas highlighted by the Finance Minister. Technology has been recognized as an important enabler across initiatives ranging from agriculture to skill development to PDS to public procurement. Also, the announcements on the Rural Digital Literacy and the Digital Saksharta Abhiyan are positive strides to bolster the ‘Digital India’ vision."

As ‘Make in India’ and ‘Digital India’ remain important items on the agenda in the Budget this year, the changes in the customs and excise duty rates on components & sub-components reaffirm the ‘Make in India’ vision of the government. "This will help in building a robust component ecosystem in the country, which is very important for becoming a manufacturing hub. While the government’s focus has remained on giving an impetus to domestic manufacturing, we were hoping to see the duty differential policy being extended to PC manufacturing but could not happen. We will have to engage further with the government in this area.”

M P Vijay Kumar, CFO, Sify Technologies Limited remarks how one is surprised (though happy) to see no change in service tax rate. "Is this a hint that GST rate will be sub 20 per cent? If so, this would be good. We have managed fiscal deficit owing to the oil scenario. Capital asset formation is not happening and we are not seeing much measures in that direction. Exports are key. With present exchange rates and the “Make in India” campaign, exports should have been given some thrust. We cannot bank on present oil prices to support our forex needs in long run."

However, taxing Dividend in hands of individual is being felt as retrograde. "As profit is already after tax and there is dividend tax of 20 per cent, another tax in the hands of the individual is unwarranted. It will also impact HNIs investing in start-ups / encouraging enterprise. Capital market has lot more role to play for economic growth and this could have been avoided." Kumar pointed.

Dinesh Aggarwal, Joint Managing Director, Anchor Electricals Pvt. Ltd. added that lowering of IT rate for small size Companies, Tax holiday and speedy registration for Startups will ensure development of the ancillary ecosystem and encourage Innovation and new technologies & business models."

P. Venkatesh, Director – Product Division, Maveric Systems welcomes the reform in taxation. "The proposed reform in taxation to reduce litigation, certainty of tax and also an affirmation of no retrospective legislation should help foreign investment into India."

The budget was also seen as composed of some ‘baby steps’ as Partha Iyengar - VP & Gartner Fellow, Country Manager Research (India), Gartner sees it.

He cites incentivising the creation of domestic IP, driving domestic innovation, creating a favorable environment for startups, and continuing the ‘Make in India’ focus with a few more specific ‘catalysts’ announced in the budget here.

As he aptly reminds, the devil is in the implementation of these schemes as always. "It is good to see a mention of review of program effectiveness as one of the goals in the budget, but till we see that followed up religiously it is hard to give it credence."