Budget Reactions – Tarun Sharma, BMC Software India

by CXOtoday Staff    Mar 03, 2011

Tarun Sharma BMC SoftwareTarun Sharma - VP and GM, R&D, BMC Software India shares his post Union Budget 2011 reactions with CXOtoday.com

Pune is an IT services hub, and is growing at a fast pace, with large global entities looking at the region for a share of the IT pie. Also, we have the biggest R&D base globally here in Pune, and of course, there have been expectations from the country’s budget on components like the extension of Software Technology Park of India (STPI) scheme, implementation of direct tax code (DTC), prompt implementation of goods and services tax (GST), investment in skill training and higher infrastructure outlay. The Finance minister has put an end to the 10 year tax holiday scheme under section 10(A) of the Income tax Act which was expected to continue till the direct tax code benefits started rolling in .

The biggest expectation was for the Minimum Alternate Tax (MAT) to remain at the same level. However, according to the latest reports on the budget, this has not been the case and the MAT has been hiked from 18 to 18.5 percent, which is disappointing, considering that the MAT was increased from 15% to 18% last year which will create further cash flow issues. Further, the budget proposes changes in the Transfer Pricing provisions which might lead to further litigation in the transfer pricing arena. However, the reduction in surcharge for domestic companies from 7.5% to 5% and 2.5% to 2% for foreign companies was a welcome move. All in all, we can only hope for better budgets in the coming years, to improve on revenues.

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