BUDGET 2012-13 EXPECTATIONS

In times of uncertain Global macroeconomic conditions and highly complicated economic scenarios the UPA GOVERNMENT is set to deliver it’s the UNION BUDGET ON 16th March2012. This budget could be a final showdown or a much needed face saver for the government.

The main orientation of the budget is expected to be to strike a balance between spending and maintaining the sustainable growth.

Recently industry body CII asked Finance Minister Pranab Mukherjee to retain the current rates of excise and service tax in the Union Budget 2012 to boost investments. 

Others like Mr  N Chandrasekaran, MD & CEO of Tata Consultancy Services has acknowledged  that the  taxation issues on onshore tax exist and that the IT industry needs a simplified tax structure in this Budget. "We want a simplified structure and clarity," he said. 

Thus the move towards implementation of the GST and DTC - Revision of tax slabs, rates also need to be strengthened.

FOLLOWING ARE A COMPILATION OF SECTORAL BUDGET EXPECTATIONS AND EXPERT VIEWS 

IT/ITES SECTOR

1.      MAT (Minimum Alternate Tax) rate should be kept stable.

2.      Special incentives for Small & Medium Businesses.

3.      Revival of tax benefits under the Software Technology Parks of India (STPI) scheme.

4.      Increased IT adoption by Government. 

5.      Measures to boost STPs/SEZs projects in Tier-II and Tier-III cities.

6. Further strengthening of legal framework for protection of Intellectual Property Rights (IPR) and data security.

7. Inadequate infrastructure facilities in terms of transportation, connectivity, power and communication facilities have increased the cost of doing business in India. 

     This is forcing IT firms in India to explore other low cost destinations such as Philippines. Thus, in order to sustain the long-term growth of the IT/ITes industry, it is imperative for the Government to take measures to increase the infrastructure investments.  

BFSI SECTOR

1.      Removal of the Securities Transaction Tax (STT) on equity trades for the upcoming Union Budget is priority. Abolition of STT will revive intra-day trading, reduce transaction cost, promote equity culture and retail participation and engender healthy speculative activity required for the functioning of the market and revival of sentiments.

2.      Lock-in period for fixed deposits of up to Rs 1 lakh that are eligible for tax deductions under Section 80C of the Income Tax Act is to be brought down to three years from the current five years to bring it on par with a similar deduction available for equity linked savings products where lock-in is only three years.

3.      Microfinance bill to be proposed in budget session.

4.      Emphasis on the financial strengthening of Public Sector Banks (PSBs). PSBs like SBI likely to get capital infusion which is expected to bring more stability.