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'Take Unpleasant But Necessary Decisions'
Photo Credit :
Padmaja Chowdary, Vice President International Finance, C3i, Treasurer and Executive Committee member ITsAP
From a direct tax aspect, the IT industry would benefit if the Union Budget of 2012-13 considers the following:
Transfer pricing regulation: Recently the Finance Ministry has directed the CBDT to put in place a framework for APA Mechanism. Finance Ministry/CBDT should expedite to constitute the panel and finalise the Rules. The frame work should also provide that the decisions by the constituted body under APA should not be challenged by tax authorities. Thereby Individual companies can go to APA to get an approval on the pricing agreements, such approvals should prevail.
This would help IT companies immensely considering that most IT companies have international transactions with Associated enterprises.
Such a regime would reduce uncertainty in the business environment and help reduce litigation costs.
Further, on taxation of International transactions, whilst Dispute Resolution Panel a constituted panel of three CITs has been formed, most of the decisions by this panel have not been in favour of the Assesse. The disputes thereafter continue to be carried out at the ITAT level.
For Individual companies appealing to DRP, would be good if DRP decides on the individual merits of the cases and give a pro-active decision akin to CIT appeals.
Abolish MAT on SEZ: It would help if the Finance and Commerce Ministry consider abolishment of MAT levy on SEZ Developers & Units. This consideration should also flow in the DTC regime to ensure continuity of benefit. The current MAT rate, based on applicability, is at two third the maximum marginal rate of Corporate Tax.
From an Indirect Tax aspect, the Finance Ministry could expedite on refund of service tax on input services that have gone into Exports.
IT Industry in India is currently facing revenue and margin pressures.
At a global level there is the negative sentiment in the US on outsourcing, there is also the possibility of a recession in the US, debt crisis in Europe etc. All of these factors could impact the exports not to mention the employment opportunities in the country.
The Respected Ministry should take into account the current challenges and help create an environment of tax regime that helps businesses comply and focus less on litigation and refunds and more on business itself.
M.P. Vijaykumar, Chief Financial Officer, Sify Technologies
"Given the rash of controversies surrounding the Union Government, the Budget likely to be fairly populist and act as a balm. Unfortunately, that is a solution that the country can ill afford at this stage.
While fiscal deficit has to be necessarily lower, significant government investment is a must towards education, hospitals and infrastructure, which will trigger all round growth. The need of the hour is statesmanship and a nerve to take unpleasant but necessary decisions.
The structural reforms long overdue on DTC, GST and Company Law reforms should be allowed to happen. This apart, tax administration has to be more efficient and tax payer friendly, if industry has to see double digit growth and also get more FDI. As regards, personal tax, recommend proposals for encouraging individual savings which can become long term source of fund for Government driven long projects."