The profit from special economic zones(SEZs) now attracts minimum alternative tax or MAT. A tax waiver in the Union Budget 2013 will help small and medium IT companies to move their businesses to SEZs swiftly.
Moreover, the licensing of software attracts both value added tax(VAT) as well as service tax. The sector expects the government to remove the anomaly and thereby reducing the duty burden on software end users.
For hardware firms, the current duty structure makes imported products cheaper than locally assembled products.
Therefore, The industry would like to see initiatives on tweaking the duty to promote local manufacturing and assembling of hardware components.
The information technology sector’s wishlist for the Budget includes more spending on nation’s cyber security and infrastructure as well as exempting hardware components from import duties.
While software industry body Nasscom hopes the government will spend more on IT-led development initiatives, hardware grouping Manufacturers Association of Information Technology is looking for more tax exemption.
“The government has recognised the role of IT, but we need important allocations in cyber security andentrepreneurship,” said Bishakha Bhattacharya, director of government relations at Nasscom.
Nasscom also wants the government to provide sops encouraging investment and promoting the culture of entrepreneurship.
The hardware sector wants exemption of customs duty on imported hardware components. Anwar Shirpurwala, executive director of MAIT, said there has been little focus on encouraging electronic goods manufacturing within the country and expensive tax structures often discourage those interested in setting up plants.