This will be first time the Modi government will be presenting a Budget for an entire financial year after it has come into power. With the economic climate demanding high-voltage reforms and measures, budget should not be conservative and indecisive. The Indian IT industry has grown steadily and is set to cross the $100 billion milestone according to the National Association of Software and Services Companies (NASSCOM). The sector’s revenues now contribute around 7.5 percent of the country’s GDP.
The industry provides direct employment to about 2.8 million Indians and indirectly employs 8.9 million people. As part of this dynamic sector, we expect some large-scale policy changes. The sector has the potential to keep India on the world map for the foreseeable future because of its growth and impact. We hope that the government will revisit some tax issues the industry is facing today. Tax administration has become a sore issue. We are concerned about refunds pending at the tax office on account of both direct and indirect taxes.
Existing hassles over tax issues must be resolved soon for the industry to grow further. Confusion around taxation of multiple entities of the same group needs to be resolved soon. It is important that measures are taken by the Government to provide a boost to the sector. Currently, there is a need to expedite the implementation of some policies and measures to help this segment. While a number of items were proposed in last budget sessions, implementation of the same has been a slow process. GST or Goods and Service Tax for example was also a focal point during last budget sessions and was supposed to be rolled out in a phased manner; yet the implementation is still underway.
Surprisingly, India being key player in software and software development, New Government wants investment in this segment and want that key players comes to India for setup. Previous Government -2- couldn’t clarify yet that Software is Service or Goods. Hence vendors & channel partners need to face dual taxation. Even after paying dual tax, Software vendors are being served notice by service tax &/or excise &/or sales tax &/or Income tax departments. This is top issue among Software sellers, which Government must address at top priority. Apart from that there are many contradictory judgments on software taxes.