|
|
|
Run-up to the Budget: Information Technology
IT: State of the industry (2000-01)
- According to NASSCOM, revenues of the Indian software industry are expected to increase by 46 per cent. Software exports are expected to increase by 56 per cent, and revenues from the domestic market are expected to increase by 24 per cent.
- Sales of PCs are expected to increase by 25 per cent, as compared with 37 per cent in 1999-2000.
IT: Industry expectations from the Union Budget (2001-02)
- A reduction in the excise duty: The IT industry has asked for a reduction in the excise duty, from 16 per cent to 8 per cent.
- A reduction in the customs duty: According to the ITA (Information Technology Agreement), under the WTO, by 2005, the customs duty on IT items would have to be removed in stages. The IT industry has asked for a minimum customs duty differential of 10 per cent between finished goods and input parts and components. The industry has also asked for a reduction in the customs duty on networking equipment, to 5 per cent.
- The removal of the special additional customs duty: The IT industry has asked for the removal of the special additional customs duty.
- Income tax exemption for companies operating in special zones: According to the existing provisions of the Income Tax Act, if during the year, over 51 per cent shareholding of a company changes hands in 100 per cent export oriented units, export promotion zones and software technology parks, then the company would not get income tax exemption from that year. The IT industry has asked for the removal of this restriction.
- No tax on e-commerce transactions: NASSCOM has asked for a tax moratorium on e-commerce till 2006.
- Clarification that on-site services exports are tax exempt: NASSCOM has asked that a clarification be issued, stating that on-site services would continue to get income tax exemption under the new Sections 10A/10B of the Income Tax Act.
- Tax holidays for software units in backward areas: NASSCOM has asked that IT software and services units be given tax exemption, like manufacturing units in backward areas.
- Dividends from overseas subsidiaries of IT software and service companies to be exempt from tax: According to the Income Tax Act, if an overseas branch office brings in profits from its overseas software activities into India, then it gets income tax exemption, whereas dividends from overseas subsidiary for similar operations do not get a tax exemption. NASSCOM has asked for a tax exemption on dividends from overseas subsidiaries.
- No service tax on software services: NASSCOM has asked that computer software development and IT software services should continue to be exempt from service tax in the domestic market.
- Allocation of funds for upgrading RECs and new IIT/IIIT: NASSCOM has asked for the allocation of Rs 10 billion in 2001-02, for partially upgrading 43 RECs to the level of IITs, and starting new IIITs in 2001-02.
Computer hardware and software: Duty structure
|
(per
cent) |
1999-2000 |
2000-01 |
|
|
Customs |
Excise |
Customs |
Excise |
|
Computers
and
peripherals |
20 |
16 |
15 |
16 |
|
Parts
and
accessories
of
computers
(excluding
PPCBs) |
5 |
16 |
5 |
16 |
|
PPCBs |
20 |
16 |
15 |
16 |
|
Microprocessors
for
computers |
5 |
16 |
0 |
16 |
|
Connectors
for
IT
hardware |
20 |
16 |
15 |
16 |
|
Application
and
system
software |
0 |
0 |
0 |
0 |
|
FDD;
HDD;
CD-ROM
drives
and
other
storage
devices |
5 |
16 |
0 |
16 |
|
Stepper
motors |
25 |
16 |
5 |
16 |
|
Floppy
diskettes |
20 |
16 |
15 |
16 |
|
Parts
of
floppy
diskettes |
25 |
16 |
5 |
16 |
|
Integrated
circuits
and
micro
assemblies |
5 |
16 |
0 |
16 |
|
Deflection
components
for
use
in
computer
monitors |
0 |
16 |
0 |
16 |
|
Key
switches
for
key
boards |
20 |
16 |
15 |
16 |
|
Cables
(less
than
80
V) |
20 |
16 |
20 |
16 |
|
Ink
cartridges,
ribbon
assembly
etc. |
40 |
16 |
25 |
16 |
|
Set
top
boxes |
40 |
16 |
25 |
16 |
|
Digital
still
video
camera |
40 |
16 |
20 |
16 |
|
CD-ROMs |
5 |
16 |
0 |
16 |
Notes
- A surcharge of 10 per cent on the basic custom duty has not been included.
- The countervailing duty on the aggregate of the assessable value; basic custom duty and the surcharge has not been included.
- The SACD has not been included. In 1999-2000, the special additional customs duty (SACD) of 4 per cent
was applicable only for non-traders. In 2000-01, the SACD was also made applicable to traders.
Source: Central Excise and Customs Tariff
Software industry: Revenues
|
(million) |
Domestic |
Exports |
Total |
|
|
Rs |
US
$ |
Rs |
US
$ |
Rs |
US
$ |
|
1994-95 |
10,700 |
350 |
15,350 |
485 |
26,050 |
835 |
|
1995-96 |
16,700 |
490 |
25,200 |
734 |
41,900 |
1,124 |
|
1996-97 |
24,100 |
670 |
39,000 |
1,085 |
63,100 |
1,755 |
|
1997-98 |
35,100 |
950 |
65,300 |
1,750 |
100,400 |
2,700 |
|
1998-99 |
49,500 |
1,250 |
109,400 |
2,650 |
158,900 |
3,900 |
|
1999-2000 |
72,000 |
1,700 |
171,500 |
4,000 |
243,500 |
5,700 |
|
2000-01
P |
95,000 |
2,100 |
285,000 |
6,240 |
380,000 |
8,340 |
P: Projections
Source: NASSCOM
Compiled by CRIS INFAC
Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.
Rediff-CRISIL Budget Impact Analysis
Budget 2001
Tell us what you think of this report
|
