NASSCOM Statement on Union Budget 2010

Union Budget 2010-11 reaffirms importance of technology in realizing the national agenda of the country

• NASSCOM welcomes budget thrust on inclusive growth with balancing fiscal deficit
• Positive for SEZs, Service Tax refunds and thrust on R&D

NASSCOM today welcomed the Union Budget Proposals 2010-11 terming it as progressive, long-term and providing the right thrust on social sector development, education, infrastructure, managing fiscal deficit, simplification of policies and convergence towards GST and Direct Tax Code.

Mr. Pramod Bhasin, Chairman, NASSCOM said, “We are delighted that the Finance Minister has recognized the key role our industry can play in driving technology led inclusive growth across the country, apart from directly contributing as an employment generator and foreign exchange earner.

The announcement of the Technology Advisory Group under Mr. Nandan Nilekani, automation of central excise, GST and commercial taxes will enable the vision of citizen centric governance. Our industry will partner with the government to drive inclusive growth within India, while continuing to be the leader around the world in IT and business process solutions”.

Mr. Som Mittal, President, NASSCOM said, “There are numerous positives for our industry in this budget, particularly on simplification. The removal of anomaly in Section 10AA of the SEZ Act and the Finance Minister’s reaffirmation on the importance of SEZs will help the industry to take forward its SEZ plans across the country. The enhanced deduction on R&D investment will propel greater thrust on innovation and IP creation helping India to realize its vision of being the global R&D services hub”.

He further added, “The reduction in personal income tax will greatly benefit the employees in our industry who will help to drive both enhanced savings and consumption within India. At the same time, the clarification on duty applicability for pre-packaged software as well as service tax refunds will provide the much necessary simplification of policies”.

While overall the budget is positive, we are disappointed with the increase in MAT which will be a burden on small and medium businesses who are still struggling with the impact of the global recession.

There was also no move towards announcing parity of incentives between the STPI and the SEZ scheme which is again necessary for small companies and development of tier 2 and tier 3 cities. In line with our recommendation, the IT Taskforce formed by Department of Technology (DIT) had also strongly recommended that the STPIs be brought at par with the SEZs.

The tax benefits under the STPI Scheme are available till March 31^st, 2011 and we will engage with the Government and through the Ministry of IT to represent for an equitable benefit to the SME sector.