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HomeNewsOpinionGovt should lower taxes on domestic software & IT services in Union Budget 2017

Govt should lower taxes on domestic software & IT services in Union Budget 2017

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One of the expectations from the 2017 budget is that the direct tax rate is reduced and / or deductions increased. Since government would want to spur spending and because of demonetisation spending in certain sectors has slowed down, we expect the government to lower the tax rate as well. This will put more money in the hands of employees and individuals which we believe will help spur spending and lead to a positive effect on the economy.

Also with the GST coming in, we may also see certain changes in the IT industry where the IT industries like us will get rationalised. If you see, we are paying two types of taxes one being the service tax and the other is the VAT. With respect to GST being rolled out, there will be a lot of rationalization of tax especially for the IT industry which would help us significantly.

We are expecting that the rate of taxes on domestic software & IT services are brought down as this will help lower costs of these items and lead to increased adoption. This will have a significant impact in helping the government achieve is vision of a .

Government may also bring in more stress on the insurance schemes. Like for instance, they may bring more variation on the NPS schemes as the PF rates are coming down and the NPS plans are pushed through. We expect the government to take special steps to augment or help develop specific skills which will now be needed as a large segment of population is moving online.

These are the some of the changes which we expect to happen in the 2017 budget. Due to demonetisation and the stress on a less-cash economy, a large number of transactions will move online. In 2017 budget this will be further supported by the government which is definitely a benefit for the IT industry as they can now provide new and innovative solutions to help businesses and individuals in this process.

Since demonetisation is not restricted to just the cities, businesses and individuals in the smaller cities would also need to adopt various IT / IT enabled services. This will lead to opening up the market (which is now generally restricted to the larger) to the Tier –II and Tier-III cities also. Along with the prospect of providing the solutions, the IT Industry would also need to figure out how to help first time business IT adopters to move to these solutions.

In addition to the DeMo announcement, there have also been directives from the PF Department and Labour Commissioners asking businesses to pay their employees through Bank Transfers and cheques. This coupled with other announcements regarding increasing in ESI Wage limit, etc. would mean that the compliance requirements of organisations would increase.

So at Greytip, we see this an opportunity to help small businesses in big and small cities be compliant and reduce the time and effort that they would need to spend to achieve this. Of-course, this is in addition to ensuring that all the calculations are done accurately and as per the latest laws and amendments. This being the situation, the IT sector will play a critical role going forward in helping businesses adopt to the new reality.

Since we will be getting on to online transaction and operations online, the infrastructure in these platforms has to be improved and changed. Availability of electricity, telecom infrastructure, internet & broadband, smartphones & digital literacy are very important aspects that needs to be accessible to everybody and the government needs to address these issues. We also feel that the Govt. laying stress on improving digital literacy would help larger segments of the population move online.

If these amenities are fulfilled by the government then service providers like us can make use of this infrastructure, build and cater solutions for everybody.

The author is co-founder & CEO of . Views are personal.

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Girish Rowjee
Girish Rowjee
Girish Rowjee is co-founder & CEO of Greytip Software, a people management software company focusing on SME.
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