Budget 2017 left much to be desired for the information technology sector. From imposing new tax proposals for individuals and corporates to announcing new digital payment schemes, the finance minister Arun Jaitley said that the government is clearly focused on spurring growth in the IT sector.
The budget showed an aggressive focus on digitization, and it also reinforced government’s reliance on technology for achieving development goals, as it focused on infrastructure and empowering startups and SMEs. The IT industry welcomed the initiatives to expand the tax base and eliminate evasion.
According to Sunil Jose, Managing Director at Teradata India, the budget gave a positive outcome for the industry, by highlighting the focus on enforcing greater transparency and accountability, with a clear attempt to widen the tax base.
The tax relief given for the middle-class tax payers will boost the purchasing power.
He says, “Our finance minister has mentioned several references of using data mining to improve the efficiency of the various tax departments, specifically with regards to transforming India from a cash driven to a digital economy, using new measures such as Aadhaar Pay.”
Jose believes that this will, in turn, make India fiscally stronger and have a positive impact on national growth and development.
Government’s commitment to making taxation rate reasonable and tax administration fair are definitely a right decision at the right time, agreed Rajiv Srivastava, Managing Director at HP India.
Srivastava explains, “The tax relief given for the middle-class taxpayers will boost the purchasing power, thereby aiding the overall growth of the economy. The major tax relief was given to the MSMEs and SMEs with an annual turnover of Rs. 50 crores, would enable them to invest in job creation, increase capital expenditure and explore their digital journey.”
“We also welcome the commitment to start GST awareness program from April 2017 for all stakeholders and implement it as per schedule,” adds Srivastava.
The focus on making India a digital payment economy will definitely help companies like HP to contribute to technology adoption in rural and semi-urban areas, thereby bringing the Digital India vision closer to reality.
Extending the period of MAT credit, and concessional tax rate for SMEs, are great moves for the growth of our economy.
Dewang Neralla, MD & CEO at Atom Technologies hopes that the special focus on digital payments and the tax breaks on the POS and other devices will help foster better penetration for digital payments.
The IT leaders perceive this union budget to be the one that will bridge gaps in the country’s efforts to enhance its growth momentum.
Prabhu Srinivasan, Chief Strategy Officer, Intelenet Global Services, a third-party business process outsourcing and contact center provider considers the ongoing move towards GST as a commendable effort.
Srinivasan also believes that the step towards minimum alternative tax (MAT), with the current amendment to increase the tenure for usability of refunds from the current 10 years to 15 years, will enable developers to claim credit in long-gestation projects.
Agreeing to that, Sanjay Jalona, MD & CEO at L&T Infotech says, “Extending the period of MAT credit, additional favorable measures for start-ups to foster innovation, and concessional tax rate for SMEs, are all great moves for the growth of our economy.”
Sify Technologies is also content with the budget announcements as they were on the expected lines.
According to M. P. Vijay Kumar, CFO at Sify, “The reduction of tax for business entities to 25 percent and encouraging the reduction of the presumptive tax rate to 6 percent are two of the exceedingly forward-looking steps.”
Venkatesh P, Director- Platforms and Solutions at Maveric Systems also believes that there is a credible shift in terms of social spend and an acknowledgment of things that need roll back like MAT. “The focus on MSME is welcome given its ability to generate employment across the nation,” says Venkatesh.
The government’s announcement to allow eligible startups to avail their three-year tax holiday in a block of seven years also gives further impetus to the startup India initiative.
Rostow Ravanan, CEO, and MD at Mindtree says that the IT exemption for start-ups will help in reducing the income tax for smaller companies with a turnover less than INR 50 crore. “We believe the step towards the startups will significantly improve the ease of doing their business,” says Ravanan.
Cyber security perspective
Arun Jaitley has made substantial announcements on enhancing the security of digital transactions, and the overall cyber security environment of the country. He has announced setting up of a Computer Emergency Response Team (CERT) to strengthen the security of the financial sector amid the increasing incidents of cyber frauds. The IT security industry is buoyed by this path-breaking budget, which takes another major step towards a complete digital economy.
As India digitalizes rapidly, holistic approach to cyber security is a pre-requisite to foster and sustain the trust of all stakeholders and customers.
According to Sanjay Rohatgi, Senior Vice President, Asia-Pacific, and Japan at Symantec, enhanced investment in digital infrastructure, promotion of digital economy and cashless transactions, and prudent investments in cyber security are must for the desired outcome.
CERT reaffirms Digital India’s long-term commitment towards securing consumers against cyber frauds.
Rohatgi stresses that while setting up of dedicated CERT for financial sector demonstrates the focus on cyber security, it would have been better to set aside 8 percent of the allocation for every digitalization project of the government exclusively for cyber security.
Surendra Singh – Country Director, Forcepoint believes that CERT reaffirms Digital India’s long-term commitment towards securing consumers against cyber frauds. He says, “This initiative will help strengthen the security of the financial sector, thereby protecting the consumers of various financial institutions.”
The government needs to develop a strong security framework to protect sensitive information. A strong public-private partnership with a security provider is essential for the government to safeguard the emerging digital India, says Rajesh Maurya, Regional Director, India & SAARC, Fortinet.
He says, “Government agencies should also proactively partner cyber security organizations and solution providers to share threat information so that collectively the industry can have a more comprehensive view of the Indian cyber landscape to protect the new initiatives planned in this budget.”
Harsh Marwah, Country Manager at Verizon Enterprise Solutions believes that the increased investments for the growth of the digital economy will usher in a knock-on effect on additional transformational development in India.
He says, “It is heartening to see the government’s plans to develop a CERT team to tackle the increasing threat of cybercrime in the BFSI space. It demonstrates how cyber security is increasingly becoming an integral part of the government’s national agenda.”
Explaining further he says, “Secure digital infrastructure and network will be essential for the acceleration of the Digital India movement. It will also encourage adoption of e-banking and e-payments on a regular basis.”
Government agencies should partner with cyber security organizations to have a more comprehensive view of the Indian cyber landscape.
Saket Modi, CEO & Co-founder at Lucideus thinks that due to the rise in a number of digital transactions, CERT for this sector will certainly boost the cyber security stature, and bring in more confidence amongst consumers to adopt digital transactions.
He also suggests that setting up a separate payments regulatory body will bring in more structured policies and is a clear push to regulate cybersecurity in the digital payments segment.
“The budget has laid down clear focus areas and digital being one of the key foci excites us,” concludes Modi.