Union Budget 2017: What IT industry expects from Arun Jaitley?

After demonetisation, a bundle of friendly announcements are expected in this year’s Union Budget for all the sectors of the Indian society.

Written by: Chanchal Chauhan

Updated: January 30, 2017, 6:10 PM IST

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Union Budget 2017

New Delhi, Jan 22: The Union Budget 2017 will be presented on February 1 by Finance Minister Arun Jaitley. The government has already started the budget-making exercise for fiscal year 2017-18 by issuing the customary budget circular in September. In November 2016, PM Narendra Modi had given hints about the advancement of Union Budget. Since PM Modi demonetised the country’s two high value currency notes on November 8, which Narendra Modi continues to believe was a well-thought decision and that people will continue to put-up with, a bundle of friendly announcements are expected in this year’s Union Budget for all the sectors of the Indian society.

ALSO READ: Union Budget 2017 to have crucial changes

We have listed out some of the expectations and recommendations that the IT industry has from the Union Budget 2017 given by Sriram S, Co-Founder and Director at iValue InfoSolutions. Let’s look at them:

Challenges IT industry face:

• Clarity on tax, dual taxation, variable rates across states, octroy/entry tax and permits kind of issues expected to be addressed through GST.
• Custom duty payment is upfront, service tax and VAT also within weeks of sales with collections happening after months severely impacting growing business on cash-flow front.
• TDS refunds take 3-4 years impacting working capital availability to grow business.

Things the government can do address these challenges:

Sriram S writes, “Rollout GST to consolidate tax with clarity across geographies. The government can also move tax and duty payments from sales to collection basis and abolish collecting upfront and reimbursing later kind of taxes (TDS and SAD on hardware).”

How does the budget affect the IT Industry:

• Focus of the Government is already on Smart city, e-Governance, online transactions/payments along with GST rollout will give impetus to growth of IT industry.
• GST will offer the much needed clarity on tax with uniform rates across states facilitating smooth movement of goods across India.
• Demonetization benefits to formal economy will further add to growth of India.

Expectations of the IT Industry:

• Lower personal and corporate taxes post demonetisation will benefit to drive better compliance and coverage.
• Abolish TDS which is leading to precious working capital stuck with Government for years awaiting refunds, thus increasing borrowing cost and impacting growth.
• Investing in increasing the cyber security to enable secure online transactions and payments between citizen and government agencies.
• Higher budget allocation to improve infrastructure including telecom and internet.
• GST and custom duty payment to be linked to collection and not sales to help cash flow challenges of small and medium entities.