Pre-budget talks: IT sector seeks tax waivers on purchase of personal computers

To create an ecosystem for electronics and IT hardware manufacturing, a proposal for a component trading hub was also discussed in the meeting.

By: ENS Economic Bureau | New Delhi | Published:December 11, 2016 10:34 am

In a pre budget meeting with finance minister Arun Jaitley on Saturday, the representative of information technology sector proposed that government should provide tax benefits on purchase of personal computers and make loans available at 3-4 per cent. To boost digital economy in India, they suggested that over-ground towers and underground fiber cable network need to be improved significantly to deepen broadband penetration. The IT sector government support to fight rising protectionism globally.

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“Government support was required for IT sector in view of increasing trends of protectionism and anti-globalisation abroad,” the finance ministry said after the IT sector representatives met top government officials.

“Further, there are issues about speed and penetration of broadband in India. Number of Wi-Fi hotspots is very low in the country. Hence, it was suggested that over-ground towers and underground fiber cable network need to be improved in a big way. At the consumer end, smart phone prices need to be further brought down so that broadband is more accessible to masses,” they said.

To create an ecosystem for electronics and IT hardware manufacturing, a proposal for a component trading hub was also discussed in the meeting.

“Adoption of personal computer will be a catalyst for transformation of country to a digital economy and knowledge economy. To increase PC penetration, it was also proposed that easy loans (3-4 per cent per annum ) should be provided by banks for the purchase of personal computers and cost of PC should be allowed for deduction under Section 80C of Income Tax Act.

Jaitley told the gathering that India’s external position is more robust now and the return to resilience to periodic global shocks is sustainable. The minister said that the electronic market in India is one of the largest in the world and is expected to reach $400 billion in 2020.

Industry representatives asked the government to improve ease of doing business in the country. “Our main focus is on ease of doing business and level playing field. Important backdrop of our suggestion was that the industry does face headwinds globally because of protectionism and anti-globalisation forces in different country,” Nasscom President R Chandrashekhar said.

He said Nasscom has sought reduction in safe harbour margin which is very high at 25-30 per cent, extension of R&D benefits to IT sector, clarity on cut in corporate taxes from 30 to 25 per cent and support for SMEs and start-ups.

“Domestic investments are also important and currently resident investors are taxed at twice the rate than non-residents. This is an anomaly which we felt should be removed,” said Chandrashekhar.

Mobile industry body Indian Cellular Association proposed differential tax structure for five component categories. “We have sough direct tax benefit based on value addition. This year in the phased manufacturing programme, five more components have been recommended which have to brought out of zero duty. These include mic receiver, mechanics, USB cable, keypads,” ICA National President Pankaj Mohindroo said.

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