All Eyes on Union Budget 2018-19: IT Industry Fraternity Express their Expectations

All Eyes on Union Budget 2018-19: IT Industry Fraternity Express their Expectations

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All Industries in general and ICT industry in particular have been going through a dry patch for the past few years. Demonetization and new GST law have added further woes to the industry, though these developments are expected to improve and smoothen the business processes in the long-run. Even Make in India and Digitization are set to be impacted in a big way by the budget. With government set to announce the Union Budget 2018-19 in the next few days, below are the expectations of some industry leaders on the forthcoming budget:

Mr. Alok Dubey, CFO, ACER

“With the introduction of GST, year 2017 has been an eventful year across economies and industries. For the year 2018, we are optimistic that the union budget will focus more on Digital India initiative in order to shape the IT infrastructure and increase adoption of technology to encourage digitization. We are also expecting that the government may slash corporate tax for the larger companies in the upcoming budget. It may/should help Indian companies to compete globally and attract more investments to the country. Besides this, we are also expecting that the budget will be centered around lowering personal income tax slabs, and tax savings schemes which would lead to higher disposable income and directly benefit the normal taxpayer.”

Mr. Limesh Parekh, CEO, Enjay IT Solutions

“ Realistic Budget is what I expect from this Government when it is going to propose their last budget of their current Term in office. There is more logic than hope to this argument. The Current government has implemented certain bold steps for the economy. If they release a populist budget, it might derail all those steps and reforms. As a surprise, we may also expect some bolder steps to come in like retail reforms or still more transparency in Real Estate segment.”

Mr. Shrenik Bhayani, GM, Kaspersky Lab (South Asia)

“Looking at the current situation and the government initiatives like digitization in India, it is expected that the budget which is soon to be announced soon will focus a lot more on creating funds to battle the growing concern of cybersecurity in India. Cybersecurity according to me deserves to be in the top 5 list of concerns in India.”

Mr. Rajesh Rege, MD, Red Hat, India

“Government led programs like Digital India, Make in India, Smart Cities, etc are triggers that boost the country’s economy. These campaigns have opened a plethora of opportunities for IT industry as well. To truly realize the potential of these game-changing initiatives, it is important to harness the power of collaboration and by extension, Open Source. In this budget, we look forward to continued focus on accelerating these initiatives using Open, Agile, Secure and Scalable solutions.”

Mr.Anil Valluri, President, NetApp India & SAARC

“In the past few years, the Indian Government has initiated a series of initiatives, directed at driving overall positive change in the Economy, and results are sure to follow. One positive impact for example is the fact that The World Bank now ranks India as one of the top 100 nations in terms of business friendliness, a significant jump of 30 points from the preceding year. I believe more success and impact is yet to come. The upcoming budget will be an important one, as it will be expected to provide the ‘booster’ in the forward direction. This government has demonstrated that it values technology led governance for transparency & efficiency. A stronger thrust on research and development that enables more indigenous innovation and increased investments in future technologies will be welcome. I do believe that we will see more of citizen-focused & friendly decisions, and initiatives to bolster investment in India.”

Mr.Ganesh Subramanian, Chief Financial Officer, Tally Solutions Pvt. Ltd.

  • Rationalization of input tax credit restriction:- Input Credit for the expenses incurred for businesses should be allowed irrespective of the nature of expense whether it is on food, beverages, insurance or cab expenses. If the particular supply is being used in the course or furtherance of business, the taxpayers should have opportunity to avail benefit of input credit on such supply.
  • RCM on purchases form Unregistered persons: – Although government has postponed the RCM provisions till March 2018, it would be in the interest of taxpayers to remove these provisions or postpone them till people get enough understanding about provisions of law.
  • Input Credit against CGST on pan India basis: The Input credit of CGST should not be restricted to the state where the taxpayer is registered. In the past, it was available across the country on pan-India basis; there was no link to State. Under GST, if a person is not registered in a particular state, input credit of taxes paid in such state is not allowed even if it is on account of CGST. Since CGST is being paid on account of Central Government, taxpayers should get benefit of input credit against CGST paid, irrespective of whether taxpayer is registered in a particular state or not.
  • Reduce GST on products which are likely to benefit the economy: GST on products which will benefit from the overall development of the economy should be reduced or exempted. One such example is insurance products. Currently, life insurance penetration in India is at 3-4%. In the absence of a comprehensive social security mechanism, insurance provides the first layer of financial security and the current tax rate of 18% is making insurance costlier.
  1. Talk points for direct tax

Mr.Keith Martin, Head, Asia Pacific, Corporate Business, F-Secure

“Union Budget 2018 has to take many positive steps towards aiding India’s smooth transition into a digital economy. With the constant sophistication of the cybercrime owing to the massive digital advancement and the government stressing towards digital payments, we could expect an overall digitization budget following the significantly intensifying number of cases of cybercrimes and data breaches. We can certainly expect cybersecurity to be a key agenda for the government this year.”

Mr.Pradipto Chakrabarty, Regional Director, CompTIA India

  1. PROBLEM: One of the key problems that the IT industry is facing is the reduced rate of outsourcing that has been the sustenance of IT industry in India due to increasing automation. We cannot depend on manpower driven industry for long. We need to immediately develop skills of manpower on cutting edge technology EXPECTATIONS: Government should create fund and set up Center of excellence on emerging technologies such as IOT, Robotics, and Artificial Intelligence within government and private institutions of higher education.
  2. PROBLEM: India lacks software product development capabilities which has a more sustainable revenue earning potential. EXPECTATION: Funding to institutions of higher eduction for Research and development aimed towards IT Product development.
  3. PROBLEM: Growing skill gap between what industry wants and what a fresh graduate acquired on completion of academic degree. EXPECTATION: Government should set aside budget allocations for international globally accepted certification and training programs which are standard Inez’s skill development tools for creating a baseline skill benchmark. Examples of such alliances and funding are commonplace in many developed as well as developing economies. Also, Government should spruce up a non- existent Apprenticeship program that helps industry and academic institutions get on same page on skill required from fresh graduates.
  4. PROBLEM: Huge vulnerability across segments to cyber threats, especially Defence, intelligence and Police forces. EXPECTATION: Cyber defence, incident response and creating a breach repository should be a clear budgetary priority. All institutions should have mandatory curriculum on cybersecurity so that we have adequate cyber defenders and penetration testers. Government funded awareness programs should be mandatory for IT users across India.”

Ms.Pratibha Advani, CFO, Tata Communications:

“According to several reports the world economy is slated to do well this year with a predicted global output of approximately 3%. Amidst synchronized global growth across developed economies and emerging markets India is expected to be delivering a 7% growth rate in the coming fiscal.

While these predictions portend good tidings for the Indian economy, a reduction in the corporate and dividend tax rate and the abolition of all surcharges/ cess etc would go a long way in bolstering organizations and helping them build a significant competitive edge in the global economy.

A reduction in the Minimum Alternate Tax (MAT) rates would also be very welcome. The funds saved have the option of being ploughed back to expand capacity and production thereby propelling the growth engine further.

As it stands. there is an incentivised deduction for R&D expenses for the manufacturing sector. The current plan for development for the future calls upon innovation in technology to define how we will live and work in the future. The pace of technological change makes it imperative that we invest in deep research and it would help if the government would afford the same impetus to the tech/ telco sector. This would not only ensure relevance but also a chance to be able to put our best foot forward and deliver some exciting breakthroughs for the new normal.

In addition, on a more operational level, it would be very helpful if the applicability and implementation of Place of Effective Management (POEM) was moved to April 2018 as enterprises continue to grapple with the nuances of implementing GST.”

Mr. Rakesh Dugar, CMD – Mitashi Edutainment

“Post GST, the budget has lost a lot of its importance as a large part of the expectations from the budget were related to Indirect taxes. We think the government will go for a modest / populist budget to ensure a balanced / positive sentiment before the elections. The budget needs to make it easier for companies to shift their manufacturing into India, as right now we see a lot of companies scrambling to shift their base without the infrastructure in place or lack of clarity in the rules. We need long term clarity on the taxes in a way that can promote trust and allow people to invest in manufacturing. We believe India has the capability to become a major export hub for consumer durables but needs good and stable policies to ensure that we can explore this potential.”

Mr. KK Mookhey, Founder & CEO, Network Intelligence – Global Cyber Security firm  

“In the last year’s budget, the Finance Minister announced the setup of CERTFIN. While the initiative was much needed, we hope to see much more specific action points in the 2018 budget that will align with the digital transformation journey that the country is undergoing. The 2018 budget must support development in the cybersecurity infrastructure by focusing on people, process & technology. The expectations are for benefits to local organizations for a much needed push to increase qualified cybersecurity professionals, to set up local compliance across all sectors for Data Security & to waive off taxation for homegrown cybersecurity technologies.”

Mr. Ankit Agarwal, MD at Alankit Limited 

“Budget 2018-19 will be the first budget post one of the most significant economic / taxation reform in India – the legendary GST. This year is definitely going to be crucial for sectors impacted by GST and we anticipate it being the most optimistic step taken by the government for all industries and overall economic development of India. From relaxation in tax rates, to focusing more on the infrastructure spending to recover the capex cycle, the expectation from this year’s budget are off the charts! The tax structure is majorly expected to undergo a change after the budget announcement, mainly in the direct tax structure including income tax because of the effort to make direct taxes contemporary so as to match with the current requirements. There is a possibility for the recapitalization of public sector banks; the government is expected to raise about 70,000 rupees within the first quarter of the year. With regards to the banks, one can definitely expect higher incentives and better budget allocation to enhance the credit flow to MSMEs. There can also be incentives for financing of the long term projects in roads and railways. Most probably reduction in the rate of corporate income tax, down to 25% is expected and will be taken positively by technology companies, falling in the lower tax brackets. Looking at the SME sector, we believe certain proposals in the 2018 budget are likely to provide several financing incentives to the enterprises seeking to develop SMEs and other markets etc. All sectors’ functioning including the SMEs will also come under the GST framework.”

Mr. Narendra Shyamsukha, Founder Chairman, ICA Edu Skills

“Organisations like ICA Edu Skills which are partnering with various state and Central government in offering skill-building programmes to the country’s potential workforce in diverse sectors are looking forward to Budget 2018 with a lot of hope. We expect the Union Finance Minister to take measures which will facilitate giving market-relevant training to crores of youth in the country. One of the first things the government needs to do in this regard is cap the GST rate for all type of skill training irrespective of whether they government funded/CSR funded/ Self or Employer funded at 5 per cent. Alternatively it should provide for a refund mechanism for GST.

Second, the National Skill Development Corporation’s interest rate charged from skill partners should be reduced from the present six per cent to two per cent. The government needs to make adequate budgetary allocation so that in every taluka at least 10, 000 people can be given some sort of skill training.

The number of Pradhan Mantri Kaushal Kendras and budgetary support for them should also be increased. Finally, we are also looking forward to some income tax concessions to companies providing skill-development services. There should be 150% weightage for depreciation or expenditure on skilling.”

Mr. Rajeev Bhardwaj, VP, HR, Sun Life Financial Asia Service Centre

“India is at an inflection point and gearing up to unlock potential for growth across all sectors. We expect budget 2018 to stimulate the domestic economy by creating opportunities for job growth and new incentives for doing business. IT and ITES sectors, once the mainstay of the services economy, could be at the focus of this year’s budget. Government should take a view of measures that will help spurring demand of services generated from this sector by giving adequate tax breaks and making these services more competitive globally. The government should also take a view on promoting skilling and reskilling initiatives and setting up institutions to cater to the demand from the IT and ITES sector in the light of the great digital wave that swept across the country promoted by Digital India initiatives.”

Mr.Samir Mehta, Director, TAIT

“Mumbai-based Trade Association of Information Technology (TAIT), the premier association of IT companies, welcomes the reduction of corporate tax for MSMEs and appreciates the big push for digital economy, cyber security measures and its belief in technology for achieving developmental goals. The GST implementation is promising and we look forward to it. The Union Budget 2017-18 has initiated growth and development of the IT industry.”

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