The Budget proposals on exemption of storage devices from excise duties, imposition of 8 per cent excise duty on packaged software and the re-imposition of 12 per cent excise duty on computers have evoked mixed reactions from the IT sector.
Nasscom, the apex body of the IT industry, said, "As part of the knowledge sector, we are happy to note the 31 per cent increase in budgetary support to education, which, we hope, will be backed up by some radical reforms."
Changes in the fringe benefit tax are also welcome, particularly a reduction of 5 per cent in some heads for which the BPO sector was paying around 20 per cent, it added.
Amar Chintopanth, chief financial officer, 3i Infotech said, "This is a neutral one, with no major sops for the IT and ITeS sectors. It could also be termed as disappointing, as we were expecting certain tax holidays."
He said there was no clarity on whether the proposed imposition of 8 per cent excise duty on computers would be levied on implementation too.
"Moreover, it's the meaning of 'packaged software' is unclear. There is nothing major, neither positive nor negative for the IT sector in the Budget," he added.
"The IT manufacturing industry is glad that anomalies of inverted excise tariff structure for the computer manufacturing industry has been addressed. The imposition of 12 per cent excise duty will establish a CENVAT chain for the computer manufacturing industry and will facilitate local sourcing of components like monitor, motherboard and keyboards among others," said MAIT executive director Vinnie Mehta.
Mehta added that this would promote indigenous manufacturing and encourage setting up of facilities for making of high-end products like notebooks and servers in the country.
Red Hat president (Indian sub-continent) Javed Tapia said, "Overall, this budget shows confidence in the current strength of the economy. The increased investment in education and emphasis on rural infrastructure are both good moves from a longer terms perspective."
Specifically for the IT industry, the imposition of 8 per cent excise duty on packaged software is a dampener and will cause an increase in prices of legal software.
Also the imposition of excise duty of 12 per cent on computers needs to be studied from an impact perspective, since the finance minister has said that there will be no increase in cost due to this," he added.
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