Post Budget Review Corner-1

CR Team | Friday, 11 July 2014, 05:57 IST

Post-Budget Review Corner by Gartner India

Arup Roy, Research Director, Gartner India says:

Overall, I would view this budget to have a positive push to industries across the board and augurs well for IT industry as well. This budget focuses clearly on growth, development and job creation with particular focus on infusing growth in manufacturing and infrastructure sectors. From industry perspective, the policies that would have major positive impact on the domestic IT uptake are: ‘Digital India’ program; ‘Good Governance’; and ‘one hundred smart cities’ program.

Also, FDI cap increase in defense and insurance sector is a huge positive and has direct bearing on IT industry. This budget has also set aside funding for adding new top-notch educational institutions such as the IITs and IIMs in various cities, which is likely to have a long term impact on generating technical and management talent. Lastly, the focus on micro and small and medium sized businesses and their enablement/empowerment with various schemes is a huge positive and is likely to have positive impact on the IT industry as well as such companies get empowered to resort to technology. The orientation towards growth across sectors augurs well for the domestic IT industry however, things more or less remain ‘status quo’ from offshore or exports perspective as there is no change in the position there. One area where we would have expected some concrete decision taken would be retrospective taxes and the position thereof. But overall, this is a balanced growth oriented budget with focus on accelerating on the fundamentals.

 

Post-Budget Review Corner by Meritnation.com

 

On the basis of the post budget analysis in education sector, Pavan Chauhan, MD and Co-Founder - Meritnation.com says:

 

The government's decision to focus on setting up more institutes for technical & professional education such as AIIMs, IIMs and IITs is an extremely positive step. We have a huge population and scaling successful models like IITs is critical to bring quality education to more & more people.

This budget also shows that the government is taking decisive steps towards digitization & use of technology in education and beyond through its initiatives like paperless railways & e-governance. The Rs.100 crore allotted towards virtual classrooms is really heartening. Over the years, it has been apparent that we do not have the requisite number or quality of teachers needed to educate our ever growing population. A lack of education coupled with low employability skills might make us lose out on our biggest opportunity, the demographic dividend. With virtual classrooms, we believe quality education can be imparted to students who previously never had access to quality teachers. 

To make all of this possible, it is critical that Indians have access to the Internet. The budget marks out Rs.500 crore for making broadband Internet available to Villages. In addition to this, the reduced taxes on telecom equipment which will make mobile phones cheaper will ensure that the penetration of technology continues at a rapid pace and students all over the country can access quality education at the click of a button.

While we build the virtual classrooms, it is important to train our teachers who will become the mentors of tomorrow. In this light the Rs.500 crore allocation for a teacher training fund is extremely positive. We are also happy that the Finance Minister is focusing on inclusivity of education. The "Beti bachao beti padhao" scheme will help make education more accessible to women. As someone once said, “If you educate a woman you educate an entire nation”.

 

Post-Budget Review Corner by Max Bupa

The budget quote from Manasije Mishra, CEO, Max Bupa:

 This year’s budget is progressive and forward looking and clearly exhibits the new government’s understanding of the impending needs to fuel economic growth through righteous allocation of funds and impetus to foreign investment. The budget brings alive the government’s commitment to provide a stable and investor friendly tax regime. Key thrust on improving the rural economy with focus on development programmes rounds it up as an ideal budget.

From an industry standpoint, I am pleased with the budget as it fulfills the key priorities from our budget wish list primarily FDI hike, overall push to the health insurance segment and greater thrust to the PPP Model. The hike in FDI limit to 49 percent in insurance will boost industry growth and deepen health insurance penetration in the country. The opening up of the sector will pave way for greater innovation and better quality healthcare. Also, impetus to collaboration with banking correspondents and ample financial sector reform will further insurance penetration in the country. Government’s assurance to take up amendment to the insurance bill will also bring in greater focus on the sector.

The decision to invest in credible medical institutes and colleges along with digitization in rural areas will enable utilization of technologies like telemedicine to enhance quality of healthcare and healthcare access in the country.

 

Post-Budget Review Corner by CSS Corp

Veerasundar Veluswamy, EVP & Chief Financial Officer CSS Corp says:

Negatives: 

  • No major incentives for  IT/ITES industry;
  • Contrary to industry expectations, Minimum Alternate Tax (18.5 percent including surcharge & cess) still continues to apply for SEZ’s. Also there was no indication about  time lines for removal or reduction of MAT rates
  • There is no change in the Corporate Tax rates (domestic companies almost 34 percent & foreign companies close to 43 percent). Industry expectations is that the Government would take steps to align India's direct tax rates in line with those in ASEAN to make Indian Industries  internationally competitive. 
  • Retrospective amendment still continue but however case affected by such amendments will be handled by a committee;
  • Non Deductibity of mandated 2 percent CSR expenditure for Income tax purposes 

Positives:

·         Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances. This helps reduce long standing litigation affection the IT/ITES industry severely;

  • Introduction of advance ruling for payments made to residents – This measure provides much needed clarity on the taxability of the transaction and avoiding litigation;
  • To allow use of multiple year data for comparability analysis under transfer pricing regulations. This helps provide much needed respite/clarification from a long standing dispute pending before Indian Courts;
  • Continuation of tax rate of 15 percent on foreign dividends received without any sunset clause. This helps continue the cash repatriation from foreign arms of India IT/ITES companies.
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