I-T sops likely for PCs

Over the years, the government has systematically narrowed down the tax-saving avenues for consumers and has limited tax sops to areas which are deemed important for the economy. For example consider the tax relief provided for housing, which has resulted in a boom in the realty business.

Until now, tax sops to the IT industry have been limited to manufacturing facilities and for components (import duties) that get into the manufacture of a PC. The resultant effect of such sops is reflected in the price of PCs coming down by a significant amount.

However, if the government does extend an income tax relief for purchase of PCs, the added incentive in the form of claiming a tax relief would increase the demand for PCs even further. Sources said that this would give a huge boost to branded PCs vis-a-vis those which are assembled and could narrow down the price differential between the two by a great extent.

The proposal to give tax sops in the form of tax relief is part of an overall government strategy to spread knowledge connectivity under Mission 2007 for the Bharat Nirman Programme. Such tax sops, which could be beneficial to both rural and urban India, is primarily aimed at boosting PC penetration in rural India.

Added to this, the government could rope in the banking sector to evolve schemes to provide low interest loans for financing purchase of computers for homes and community usage.

The government is already in the process of implementing schemes to standardise the domestic PC market. The intention is to make India a manufacturing hub for critical components such as CD ROM drives, LCD panels and so on, through an incentive-based system. India is far behind China in the hardware segment and the intention of the government is to change that scenario.