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IT industry may be hit: Nasscom

New Delhi: The government’s proposed move to increase the excise duty on packaged software to 12 per cent from 8 per cent may affect IT usage in the country, the industry said on Friday.

“The higher excise duty on packaged software could lead to increased cost of IT and could slow down the IT usage in the domestic sector. This impacts in particular, small and medium enterprises who have just started deploying IT,” said IT industry body Nasscom.

Software giant Microsoft India Chairman Ravi Venkatesan told PTI: “The increase in the excise duty on packaged software and IT software services becoming liable to services tax at 12 per cent will lead to an increase in the cost of software for IT users.”

The contribution of IT industry to the buoyant Indian economy did not deserve excise enhancement on packaged software and imposition of service tax on custom software, IDC India Country Manager Kapil Dev Singh said.

Infosys Technologies’ CEO and MD Kris Gopalakrishnan said the budget has not been positive for the IT industry.

“Smaller companies should have been given tax relief in this budget to counter the impact of a sharply appreciated rupee,” he said. “The increase in excise duty for packaged software will lead to increased piracy.”

IT hardware association MAIT welcomed the decision to maintain the current levels of custom duty and a 2 per cent reduction in the mean CENVAT rate (Excise duty/CVD) on all IT products to 14 per cent.

The business process outsourcing industry said the budget has ignored its demands.

“The budget could not delight for the Indian BPO industries,” Business Process Industry Association (BPAI) President Sam Chopra said.

The industry, in its recommendations to the Finance Ministry, mentioned the withdrawal of MAT for initial 5-10 years for new upcoming BPO units, extension of STPI schemes and abolition of FBT on ESOPS.

“None of these issues seemed to have been addressed at the session,” he said. — PTI

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