Budget 2017 Expectation: A letter to Arun Jaitley

Pre Budget 2017 Expectations: IT industry wants Tax harmony

Besides many challenges, on February 01, 2017 - Finance Minister Arun Jaitley will be clearing out budget expectations to all. Current financial year was not a normal one, many reformative decisions were taken. So, all eyes are set on the government and so as the expectations are on peak.

In their customary pre-budget meeting with Jaitley, bankers sought full tax exemption for NPA provisioning in view their profitability and demanded a Central Registry for GST registration for banks having branches across the country.

Stating that the banking sector is the backbone of our economy, Jaitley said he "does not see any serious challenges as far as structural changes are concerned."

PSU banks on their part suggested that there is need for recapitalization of banks in the current financial year as well as in the next financial year 2017-18.

INCOME TAX RATE IS EXPECTED TO COME DOWN

Income tax rate as well as interest rate is expected to come down as a result of demonetization of high value currency notes, Minister of State for Finance, Arjun Ram Meghwal said. "I cannot reveal everything which will be part of the Budget, but interest rate will come down...it will definitely come down," the minister said. He also indicated there is a possibility of income tax rate cut in the upcoming Budget which is expected on February 1.

"There are two issues with income tax-- exemption limit, and another is slab. Both of them will be looked into," he said. Assuring relief to the MSME sector, Meghwal said the next Budget will look into their concerns. Spelling out advantages of demonetization, Meghwal said that it will help lower interest rate.

What IT industry Wants

* Extension of concessional duty benefits to all ITA goods, including PCs and Servers
* Comprehensive List of CPE Goods for inclusion under the Duty Differential Scheme
* Harmonization of IT Product Lists across Central and State indirect tax jurisdictions
* Establishment of Convergence Cell to provide impetus for the ICT sector

Nitin Kunkolienker, Vice President, MAIT and Director-Corporate Affairs, Smartlink Network Systems stated, " We have requested the Honourable Minister of Finance and his team to focus on formulation and promotion of schemes to encourage manufacture of Customer Premise Equipments in India to cater to the needs of the local market and help achieve the goals of government's 'Digital India' programme. Further, the vision of 'Make in India lies in local value addition, domestic manufacturing and empowerment of Small and Medium Enterprises so that overall volume of domestic IT-Electronics manufacturing goes up. Suitable policy interventions at this critical juncture will help Indian firms scale up their operations and become significant players in the global supply chain."

As the government moves a step closer to GST, the service tax rate be may be increased from 15% to 18% considering the proposed GST rates for services.
All service tax exporters can expect for release of all pending service tax refunds within 31.03.2017. There could also be pruning of certain exemptions under central excise and service tax to widen the tax base and certain measures for ease of doing business. Lastly the budget could see a clear road map for GST implementation being spelt out by the Government.

Here what IT sector leaders expect from most seeking budget by Modi sarkar:

Alok Dubey, CFO, ACER

“ The Union Budget for the year 2017-18 is likely to be unique as many prime factors like demonetisation, GST, cashless economy measures, will play a key role this year. We are expecting favourable change in the Income Tax slabs and rates, as customer spending is still anticipated to decline for short term due to demonetisation. We also expect the budget to focus on shaping the IT infrastructure and urge the government to provide tax deductions on purchase of PC for consumers as well providing easy short-term loans for retailers for working capital requirement. This is required to accompaniment India's emergent IT sector and further help the industry make improved technology more accessible to Indian market to fulfil government’s push for a digital economy.”

Sanjay Sethi, CEO & Co-founder, ShopClues

“This Union Budget will be a very crucial for the country and the BJP Government. Government has the twin agenda of meeting the GDP growth expectations as well as to demonstrate beyond doubt that the demonetization was just one of several steps bring taken to fight corruption and was not a cheap election stunt.

In this budget, building on the anti-corruption theme, we expect to see rollout of direct tax reforms to provide stronger disincentives for black economy, land registration reforms, greater push towards digitizations, new programs for economic inclusion & make in India."

Pulkit Punj, Director at AnG India Ltd.

“With the immense focus on smart city projects and uptight security in banks due to demonetization, the security and surveillance market is looking profoundly favorable. In the year 2017 we expect the Government to continue the progress in infrastructures and investments in advanced technologies, as we firmly support the belief that a country’s infrastructure is insufficient without high quality surveillance cameras and security systems. With governments mandatory move of CCTV cameras installations, centrally monitored systems and solutions in huge numbers in verticals like banking, transportation, public places and more, the budget should invest significantly in video surveillance solutions and quality cameras in various segments to make India a safer and smarter country for our citizens specifically for creating a safer environment for women and children. . The Electronics industry can play a key role and the government should continue to offer necessary incentives, eased tax framework and infrastructure support, reductions in import duties of security equipment's with a proper oversight and resources for dealing with threats and attacks.”

Shilpa Mahna Bhatnagar, CEO & Co-Founder Evoxyz Technologies.

“Today, India is going through an Economic reformation. This means each sector of Industry should benefit from the initiatives that are being taken by the government of India. Entrepreneurs are trying to change the face of India on the world map and the innovative start-ups are impacting the lives in a big way by generating job opportunities, inviting capital in the form of investments and bringing innovation to the door step of a common man.

Hence a favourable budget which means: A tax holiday is given to Start-ups for up to 6 years and Contribution of Government of India in the early stage Start-ups through a simple seamless process.

Also extremely negligible or Zero import duties on goods that need to be re-traded in India will give a big boost to the Start-up ecosystem and help them to flourish in a big way.

For instance, Evoxyz working for the cause of child security can create a better and faster impact in case we get this support from the Government of India.”

Anil Valluri, President - NetApp India & SAARC 

“The previous two budgets have systematically gone about creating frameworks and processes to give wings to the dreams of multiple sections of the society like Startup India, Standup India and shrink wrapped with a larger vision of Digital India. With the recent move of demonetization trying to shift our cash driven economy of 1.2 billion people and getting them to leap frog to the digital world is unprecedented in history. This is a significant leap towards becoming a digital economy and the budget now needs to focus on how digital can become entrenched and become a way of life, while continuing to focus on growth and providing adequate support to the various pillars of each program so that the economy is on a sustained growth path,”

Rajeev Jain, CFO, Intex Technologies Ltd

“The mobile handset industry is the fast growing Industry and has become an imperative part of our everyday life. India is moving towards a digital economy and mobile banking. Smart phones will play a crucial role in supporting this vision. The recent demonetization reform by the Government has further laid the ground for setting a cashless economy. The entire country is looking forward towards mobile banking which shall create a new user base and fuel the growth in mobile Industry. As an industry, we expect a long-term and stable policy on mobile manufacturing in India. The industry has huge potential and can supplement government initiatives of ‘Make in India’ with highly technical product if focused. Incentives to create sufficient technical manpower will lay the foundation of a strong and robust manufacturing base in India. Further, a clearly laid out research and development policy is necessary to succeed in a highly technical industry like ours and will help bring component manufacturing base in India to save precious foreign exchange. In the end, to create a truly inclusive digital economy, affordable mobile handset or consumer durable items up to certain value should be given a concessional duty treatment.”

Aniketh Jain, CEO & Co-Founder of Solutions Infini

“The upcoming budget is crucial to honest taxpayers and we look forward to a low taxation system, which will simultaneously promote a robust digital ecosystem. Moreover, the government should simplify the tax regime for ITs and startups to foster innovations and boost a healthy start-up environment in the country. Also, the union budget 2017-2018 should focus on digital inclusion across industries. Simplification of overall processes across all government infrastructures will be key for the success of India and I believe they should ensure that sufficient budget is allocated for the same.”

For instance, Solutions Infini is a global leader in Mobile messaging and has grown by leaps and bounds to be one among the Asia's fastest growing Cloud communication solutions provider. They caters  around 1 billion sms traffic a month.

Shailaz Nag, COO, PayU India.

"The demonetization drive needs to be followed by strong, systematic and organized steps by the government, and we need to rope in users from tier 2, 3 and 4 cities and towns. My only expectation from the Union Budget 2017 is the availability of enough funds dedicated to imparting and increasing knowledge and creating awareness amongst Indian users, both merchants and consumers, on how to pay and accept payments digitally."

Finally, a section of economists agree that the economy is in need of a strong stimulus to get back on track. This is warranted because several layers of economy have taken a hit post-demonetisation.