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BPIAI to organize Pre–Budget Session at CII Conference Room
08
Feb '08
The 2007 Budget has spelt dismay, rather than delight for the Indian IT-BPO industries. The budget had drawn more frowns than cheers from the BPO sector.

A quick study of the Budget indicates the concern areas that are likely to have a detrimental impact on the growth of the Indian IT-BPO industries.

The Minus side of the Budget 2007-08:
- IT companies brought under the Tax Net with the levy of FBT on ESOPs
- A 2.5 percent increase in Dividend distribution tax
- No attractive deals for individual tax payers (including the IT people)
- New education cess (of one percent), and add on service Tax for houses being used as commercial office premises had been levied
- Increase in CTC per employee for the employers on account of above moves
- The IT sector has enjoyed tax breaks for over 30 years, the BPO industry being 5 years old has had very little time to benefit from this though the industry employees near about 3 lakh people in Gurgaon alone.

The IT sector might be mature enough to sustain without tax breaks, but taking away tax sops will adversely affect the BPOs. The Goods Exporters are getting tax sops for over 40 years, IT getting STPI and other tax sops for over 20 years as well.

Tax sops from the Software Technology Parks of India (STPI) will also disappear for these companies and this might make investors avoid India and instead invest in other offshore locations like China, Sri Lanka and Philippines.


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