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IT sector seeks budgetary support to become competitive

N V Vijayajkumar, Bengaluru, DH News Service Jan 30 2018, 21:59 IST
Research and development establishments across the country are eligible for weighted deduction on R&D expenditure.  Representation image

Research and development establishments across the country are eligible for weighted deduction on R&D expenditure. Representation image

Indian IT-BPM industry, which registered a revenue growth of 8% to reach $154 billion in fiscal 2017, wants budgetary support to become competitive globally.

Nasscom, the umbrella organisation of Indian IT-BPM industry, has sought the government intervention for review of tax credit norms, address concerns on GST and reduce transfer pricing complexities.

In a statement, Nasscom has put across six points as 'Key Recommendations for Union Budget 2018'. It also includes removal of cascading effect of Dividend Distribution Tax on dividend received from foreign subsidiaries and discriminatory treatment of Indian investors.

Talking to DH, Nasscom President R Chandrashekhar said the Indian IT industry has grown six-fold in revenue terms over a decade and continues to be the largest private sector employer in the organised sector.

"IT spending is increasing globally, and investment in global capability centres in India continues to grow. The industry employs nearly 3.9 million people directly, 10 million people indirectly. Here we have to be competitive to keep the edge," he said.

Nasscom has also raised concerns on GST impacting business and operations. "Suggestions for centralised administrations and modification in place of supply rules to reduce complexities should be considered, given the practical difficulties and challenges the GST regime poses in the normal conduct of business for a B2B export driven sector," the IT industry body stated.

Pegasystems India Managing Director Suman Reddy stated that Indian IT-BPM industry is still reeling under the Advance Pricing Agreement leading to confusion around the double taxation component of transfer pricing.

"We are looking for further clarity on this. Further, the development centres are looking for a more favourable deduction of Section 35 (2AB) to further India's image as an R&D capital," Reddy said.

Research and development establishments across the country are eligible for weighted deduction on R&D expenditure. It is high time that it should be given to IT sector R&D in the country.

Swetang Vin, Corporate Vice President and Regional CFO AMD said supply of goods and services to units registered under STPI should be exempted from GST. "Entities registered as STPI units have fuelled the economy for almost a decade.

Amendments in the Law exempting levy of GST on services rendered to STPI would enable release of unwarranted pressure created on the working capital," he said.

India's IT-BPM industry is facing competition from disruptive emerging technologies and industry is re-imagining itself to become the digital solutions partner for the world. Praveen Bhadada, Partner and Practice Head, Enterprise Digital Transformation at Zinnov, said robotic automation (RA) is emerging as one of the most prominent digital spend categories among enterprises.

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