Nasscom expects clarity on transfer pricing from Budget 2016

Nasscom, the apex body for IT and ITES industry, expects some of the issues such as clarity on transfer pricing and benefits to STPI to be addressed in the upcoming Union Budget for better growth of the sector.

Budget 2016 is crucial for the IT/ITES and engineering services industry, according to a statement issued by Nasscom Chairman BVR Mohan Reddy.

"With this Budget, we expect announcements which may foster a better business environment and increase the ease of doing business in India. IT industry in the country has been facing several challenges due to lack of clarity in transfer pricing norms.

We are hopeful that the Budget will address this and a few other essential elements like a correction in the prevailing high interest rates of 20-30 per cent for safe harbour margins. Furthermore, the foreign trade policies should include benefits of Services Exports from India Scheme (SEIS) for Software Technology Parks of India (STPI) units," he said.

Currently, without such benefits, STPI units are at a disadvantage as compared with their SEZ counterparts for the same services, he added.

On manufacturing sector, he said the government should formulate better SEZ policies and incentives for the electronics manufacturing sector.

"India must make its R&D significantly more robust to realise the 'Make in India' dream. The government should introduce suitable changes to address the inverted duty structure. The forthcoming budget should promote more R&D benefits," he said.

Considering the increasing level of threats due to internet connectivity, the Government also needs to allocate a budget for the development of cyber security system, Reddy added.

Due to initiatives like Startup India and Standup India, there is a great momentum and enthusiasm amongst startups as well as investors, he said.

Initiatives are needed in the areas of facilitating ease of doing business to further boost startups. Exemption on direct and indirect taxes including MAT, where startups lose a big chunk of cash flows, is the need of the hour, Reddy said.