Budget impact on IT & telecom: BMR Advisors view

In the backdrop of the global meltdown and the continuing adverse conditions in key markets, the IT sector had significant expectations from the Budget. The wish list ranged from extension of tax holiday under Section 10A/10B of the Act by 3-5 years to the abolition of fringe benefit tax (FBT).

The proposals present a mixed bag for the IT sector with abolition of FBT and extension of tax holiday, albeit only by a year, providing relief, whilst proposal such as increase in MAT have been a dampener.

On the policy front, the Budget proposals do not contain any major announcements impacting the IT sector although some initiatives, such as modernization of employment exchanges, the project of the Unique Identification Authority of India, and smart cards for healthcare services will surely provide an impetus to the domestic IT services sector. The overall thrust on the education sector also augurs well for the IT industry.

 

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