2nd March, 1999
“IT is a ‘stock market’ Budget,” said Mr. Dinesh Dalmia, Chairman and Managing Director, DSQ Software Ltd. “This is not a visionary Budget, and it is very disappointing,” said Mr. K.V. Ramani, Chairman and Managing Director, Future Software Ltd., and past President of Nasscom.
Mr. Ramani said the Budget had completely ignored technology as it had not addressed the human resource development with specific reference to the information technology industry. “No funds have been allocated for IT education and that is very disappointing,” he said.
The market has reacted favourably to the Budget because of the fact that the software industry had not been imposed with any service tax as had been the rumour earlier.
On the relief expressed by most as there was no service tax imposed on the industry. Mr. Dalmia said the reported five per cent service tax, to be imposed on the software industry, was just a rumour.
Speaking on Doordarshan, Mr. Dewang Mehta, President, Nasscom, said that any service tax on the industry would be akin to killing the golden goose.
Mr. Dalmia said the clarification provided by the Finance Minister, Mr. Yashwant Sinha, on the employee stock option plan (ESOP) and sweat equity was a welcome tip, as many companies were uncertain on the taxation issues relating to ESOPs and sweat equity.
In his Budget speech, Mr.Sinha clarified that at the time of exercising the option, ESOPs would be treated as perquisites and at the time of the sale, the income from the sale would be subject to capital gains tax.
On the other hand, Mr. Ramani said: “You do not need a Finance Minister to clarify this in his Budget speech.”
“The Budget speech has not even reflected a fraction of what the Prime Minister’s national IT task force had envisioned,” he added.
Except for the marginal slashing of Customs duty on computer hardware products such as integrated chips (ICs) and other microelectronic products, there had been no major impetus to the IT sector in the Budget, according to Mr. Ramani.
Mr. Atul Vijaykar, Director, South Asia, said, in a press statement, that the Budget–as it related to the IT sector–was not bold enough.
However, in the new technology and niche areas, Future Software works in close association with the hardware development teams.