________________________________________________________________________ ________________________________________________________________________ http://www.express-computer.com/20030317/budget1.shtml FM-speak on IT
102. IT is India’s showpiece success story. We have to not just maintain its momentum of growth, but continuously encourage it. Therefore, it is proposed that the concessions extended to IT under Sections 10A and 10B of the Income Tax Act will continue as originally envisaged. As per law such companies as are currently covered by these tax exemptions lose the benefits upon change in their ownership or shareholding. This is not logical. I am, therefore, removing these restrictions; the benefit of such tax exemptions will remain even in the case of amalgamation or demerger. 103. Another anomaly is levy of excise duty on pre-loaded software in the case of computers. As software is already exempt from excise duty, I see no reason why this benefit should be denied simply because it gets loaded in a computer. From now, the value of pre-loaded software will be excluded for the purpose of charging excise duty on computers. 104. Customs duty on specified electronic components for IT industry is being reduced in conformity with our WTO commitment. 105. In addition, Customs duty on a number of capital goods used by the telecom and IT sector for manufacture of components will be reduced from 25 percent to 15 percent. For optical fibre cables, used widely for networking to provide bandwidth to the IT community, the Customs duty is also being reduced from 25 percent to 20 percent. To help the domestic industry to manufacture e-glass roving used for making optical fibres, it is proposed to reduce the import duty on specified raw materials for the manufacture of e-glass roving from 30 percent to 15 percent. 106. Telecom and domestic satellite service companies enjoy the benefit of tax holiday. Since it takes quite some time for such projects to materialise, I propose to extend the deadline of setting up the units by one more year to March 31, 2004. [From the text of the Union Budget 2003-04 speech] http://www.express-computer.com/20030317/budget2.shtml Impact on the IT sector Positive impact * Duty on 12 electronic components reduced as per WTO commitments. * Customs duty on specified telecom equipment reduced to 15 percent. * Customs duty on optical fibre reduced from 25 percent to 20 percent. * Customs duty on specified raw material for manufacture of e-glass roving reduced from 30 percent to 15 percent. * Customs duty on routers, modems and fixed wireless terminals been reduced from 15 percent to 10 percent. * Pre-loaded software exempt from excise duty. * Tax holiday available for telecom, domestic satellite service companies’ network of trunking, broadband network and Internet services continued till March 31, 2004. * Concessions extended under section 10A and 10B will continue. * Tax exemptions in relation to the tax holiday will continue on change in the ownership of companies or change in shareholding. * Overseas investment limit increased to 100 percent from present limit of 50 percent of the net worth of the Indian company. * Computer-enabled services, namely data processing, networking, back office processing and computer facility management shall not be subject to service tax. Negative impact * Business auxiliary services, franchise services, commercial training or coaching, commissioning or installation, Internet café services, maintenance or repair, technical testing and analysis, technical inspection and certification brought under service tax net. * Service tax rates hiked from 5 percent to 8 percent. ________________________________________________________________________ My comments:- ________________________________________________________________________ 1. Earlier the Bundled software component in PC hardware was subject to excise. 2. This has been given a tax exemption from excise. 3. That means to claim excise tax exemption the PC manufacturers will have to actually declare the value of the software to the Government for claiming exemption on excise. 4. The same valuation can be now used for claiming un-bundling of the software from the hardware or the OEM/PC manufacturer is forced to undervalue the software and pay a higher duty which they wouldn't do as it hurts their interests more to reduce his cost of . 5. We need to Draft a letter for the IT minister and CC'ed to Finance Minister "To make the OEM's --unbundle on request-- taking care that OEMs/PC Manufacturers do use the same valuation for bundled software while advertising and refunding the money to the end-user as they have used to claim the excise exemptions". Thus promoting consumer interests and preventing excise loss for the GOI . (Okaaayeh!!! --- I will try to re-draft the letter during weekend) Tarun Dua ================================================ To unsubscribe, send email to [EMAIL PROTECTED] with unsubscribe in subject header. Check archives at http://www.mail-archive.com/ilugd%40wpaa.org
