Budget 2018: What technology sector can expect from FM Arun Jaitley

Budget 2018: What technology sector can expect from FM Arun Jaitley

The upcoming Budget 2018 will be crucial for India’s technology sector, especially as the country has scaled many milestones in the field. Technology start-ups have Budget expectations that the finance minister would like to take into account as he prepares the Union Budget 2018-19.

Union Budget 2018 Among the key issues facing the technology sector in India at present are changing rules and regulations concerning the newer technologies such as artificial intelligence, cloud, etc. These changing rules impact incumbent players the most.

Also, the impact of new regulations like the US H1B visa issue and GDPR could result in higher deployment costs for India’s technology majors, besides, of course, the increased compliance costs.The industry has been seeking that adjustments to past years’ income emanating from APAs should be recognised as income of those years itself. Besides, equalisation levy should be treated as tax on income and be eligible for tax credit in a foreign country to the overseas online ad businesses, some industry represenatives say.

At present, there has been a convergence in online-offline business models in the e-commerce sector, largely due to heightened competition.

Amit Sinha, chief operating officer of Paytm Mall, said: "The government has made great progress in formalising economy through the goods and services tax (GST) and Aadhaar, among its many other landmark initiatives. I hope this Budget enables our fellow Indians and small businesses to reap benefits of this formalisation of the economy. Encouraging lending based on GST data can be one such step in this direction. I also believe that developing a policy framework and allocating budget to enable small value lending without excessive documentation can further help small businesses."

The industry is also seeking an extension in the exemptions granted to STP units in relation to procurements, as it used to be before the GST rollout.

Tax collected at source (TCS) under GST has been suspended till March 2018 for e-commerce companies. This provision should be removed, given their onerous compliance obligations.

Mechanism for entering into an advance agreement (akin to APA) with tax authorities for eligibility of tax holiday claim should also be introduced, say industry representatives.

Sandeep Ladda, partner and leader (Technology Sector), PwC India, says: “Weighted deduction under section 35 (2AB) for R&D activities should be extended to companies engaged in development and sale of software or providing IT services, including to technology start-ups, thus making a case for India to be the intellectual IT hub for global markets. Further, as E-Way bill rules are expected to come in to force soon, a simplified and smooth framework should be implemented, which will go towards enhancing the ease of doing business index. Lastly, the corporate tax rate should be reduced from 30% to 25%, as promised earlier, especially given the recent cut in corporate tax rate by USA from 35% to 21%.�

ARTICLE SOURCE- BUSINESS STANDARD.