Pre-Budget expectation 2015-16 by Mr. Pankaj Jain, Director at ESET India

This will be first time the Modi government will be presenting a Budget for an entire financial year after it has come into power. With the economic climate demanding high-voltage reforms and measures, budget should not be conservative and indecisive. The Indian IT industry has grown steadily and is set to cross the $100 billion milestone according to the National Association of Software and Services Companies (NASSCOM). The sector’s revenues now contribute around 7.5 percent of the country’s GDP. The industry provides direct employment to about 2.8 million Indians and indirectly employs 8.9 million people. As part of this dynamic sector, we expect some large-scale policy changes. The sector has the potential to keep India on the world map for the foreseeable future because of its growth and impact.

We hope that the government will revisit some tax issues the industry is facing today. Tax administration has become a sore issue. We are concerned about refunds pending at the tax office on account of both direct and indirect taxes. Existing hassles over tax issues must be resolved soon for the industry to grow further.

Confusion around taxation of multiple entities of the same group needs to be resolved soon.

It is important that measures are taken by the Government to provide a boost to the sector.  Currently, there is a need to expedite the implementation of some policies and measures to help this segment. While a number of items were proposed in last budget sessions, implementation of the same has been a slow process.  GST or Goods and Service Tax for example was also a focal point during last budget sessions and was supposed to be rolled out in a phased manner; yet the implementation is still underway.

Surprisingly, India being key player in software and software development, New Government wants investment in this segment and want that key players comes to India for setup. Previous Government couldn’t clarify yet that Software is Service or Goods. Hence vendors & channel partners need to face dual taxation. Even after paying dual tax, Software vendors are being served notice by service tax &/or excise &/or sales tax &/or Income tax departments. This is top issue among Software sellers, which Government must address at top priority.

Apart from that there are many contradictory judgments on software taxes.

Category of Software	Excise Duty[ in case Manufacture in India]	Custom Duty [In case of Imports]	Service Tax	VAT/ CST
Packaged Software with MRP	Yes	No basic but CVD and SAD	No	Yes
Packaged software where MRP not required	Excise duty on cost of media	No basic but CVD and SAD on cost of media	Service Tax on transfer of right to use software	Yes
Tailor made software	No	No	Yes	Yes
Paper License of software and PUK card	No	No	Yes	Yes
Software downloaded on internet form out of India	??	??	??	??

 Apart from these taxes:

Service tax – Reverse Mechanism: Yes, if Imported, in electronic form – else CVD

TDS/Withholding Tax: Yes (if Imported) up to 30% +

PS: Just synopsis of s/w tax, there is more to it.

© Technuter.com News Service

Pre-Budget expectation 2015-16 by Mr. Pankaj Jain, Director at ESET India

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