October 3, 2022


Technology Forever

Govt really should rationalise safe and sound harbour margins, reduce curiosity costs on financial loans to strengthen ITeS, KPO, software program advancement

a close up of a hand holding a remote control: Union Budget 2021: Govt should rationalise safe harbour margins, lower interest rates on loans to boost ITeS, KPO, software development

© Delivered by Firstpost
Union Spending budget 2021: Govt should rationalise safe and sound harbour margins, reduced curiosity charges on loans to improve ITeS, KPO, computer software growth

The yr 2020 will extensive be remembered and analysed for a single event, the COVID-19 pandemic which has changed the way we live, perform and use technologies. This has underscored a new urgency for digital connectivity and innovation, ushering in an era for the technological innovation sector that may last well beyond the pandemic.

COVID-19 has disrupted the way in which IT organizations work, with a substantial workforce working from house through the pandemic. Digitisation of operations, creation of electronic earnings streams, seamless shopper experience, and upcoming-era workforce styles are some of the enablers of digital acceleration that the pandemic has brought on. Against this, issues and threats linked to cybersecurity and privateness of info have the potential to become key impediments for the growth of the technology sector.

The federal government on its element has played a important part in augmenting the get to of IT expert services throughout India in several locations these types of as digital payments, infrastructure aid and digital governance. Timely interventions by way of relaxations for remote functioning, extending the sunset date for SEZ units, the extension of time for the realisation of foreign exchange receivables, placing up of a startup fund for conference the funding desires of fresh startups are some of the measures that augured genuinely nicely for the sector.

In the ensuing Finances, from an overall policy point of view, the field is anticipating company-important and bold coverage interventions to propel digital adoption throughout many industries, greater internet infrastructure and strong info protection routine. To achieve a competitive taxation framework that is a prerequisite to catch the attention of new investments in the sector, the governing administration could look at extending the concessional tax price of 15 p.c to new SEZ models which create incremental work.

The industry will also welcome clarity with respect to tax-deductibility of certain COVID-connected bills

incurred for facilitating the remote operating of employees.

Offered that several international nationals were stranded in India thanks to vacation constraints, in line with the OCED

suggestions, the federal government could contemplate carving out exceptions from PE exposure on that count. The problem relating to utilisation of SEZ Reinvestment Reserve for the reason of acquiring plant and equipment can even more be expanded to also fulfill the working cash specifications of the SEZ unit, owing to liquidity crunch prompted by COVID disruption.

To give tax holiday getaway to startups in a real sense, the government can think about exempting DPIIT recognised startups from MAT liability and extending the time period for carrying forward of losses.

Owing to the world-wide financial downturn brought on by COVID-19, it would seem even additional compelling for the government to rationalise the safe and sound harbour margins as well as reduce the curiosity fees on financial loans to ensure that India retains its worldwide attractiveness in the ITeS/KPO/software package growth and contract R&D space.

Though the Indian Progress Pricing Settlement (APA) programme has been fairly thriving, the government may possibly look at rising the workforce in the APA group and introducing provisions which make APAs time-sure, which will support in garnering far more participation in the software by IT/ ITeS companies.

Presently, the Specific Economic Zone (SEZ) rules let short term do the job from house only for a limited time period in specific cases these kinds of as for workers who are travelling, quickly incapacitated, etc.

Provided the OSP relaxations and the ‘new normal’ way of agile functioning, the sector expects the introduction of a additional liberalised regime.

Further, with an greater concentration on export earnings, the government ought to forthwith announce the fee of

Service Export from India Plan (SEIS) for FY 2019-20, extend these types of gains for FY 2020-21 and continue to let these types of profit in the new Foreign Trade Policy.

The resilience demonstrated by the sector for the duration of the pandemic and the assist that the government has extended has enhanced confidence in the lengthy-time period expansion tale of the sector. Innovation and progress in the know-how sector will unquestionably be a critical factor in driving India’s broader digital ambitions. With the expansion in digital desire and the emergence and adoption of new systems, the long run of the sector seems each exciting and promising.

The writer is Lover and Head – Corporate and Intercontinental Tax, KPMG in India.