Budget 2017: TAIT wants Lower Corporate Taxation Rates, Higher Depreciation Allowance on Purchase of IT Products

Proposed moves can directly influence increased adoption of IT by Consumers, Education and Corporate sectors – contribute to faster achievement of ‘Make in India’ and ‘Digital India’ goals

Protection of small IT traders from e-Commerce companies’ predatory pricing and rationalisation of taxes on Software are also key asks

Mumbai-based Trade Association of Information Technology (TAIT), the premier association of IT companies,has called for bold changes to the corporate taxation structure in the country, including higher tax breaks for purchase of PCs, Customer Premise Equipment (CPE), Point of Sale (PoS) terminals and other digital solutions.

 Mr. Rushabh Shah, President, TAIT, stated, “For consumers, the government should aim to lower the landed price of IT products through changes such as introduction of GST and related amendments to the country’s indirect tax regime – this would reduce the price barrier to purchase of IT goods, especially in the SOHO and Education sectors. For corporates, two things are recommended, lowering the overall corporate tax rate, which would increase the availability of discretionary funds for purchase of IT products and increasing the depreciation allowance for investments made IT infrastructure, to further increase IT adoption.

 Traditional Distribution &Retail versus e-Commerce

Rushabh strongly recommended providing a level playing field for traditional physical distribution and retail chains vis-à-vis foreign, private equity funded e-Commerce businesses,as small traders are losing money because of the predatory pricing adopted by big competitors such as Flipkart, Amazon etc. This issue needs to be addressed on priority as the smaller traders are being rendered insolvent due to deep losses.

 Taxation of Software

Mr. Shah further stated, “Taxation on software products is still very high in India.At present, there is a dual taxation on software, and the government seems happy to milk both the cows– VAT at the state level and Service Tax at the central level. Nowhere in the world is a product charged twice – first VAT and then Service Tax.This has been going on for a relatively long span of time, and it’s high time that the anomaly is addressed in the upcoming budget for 2017-18. The prevailing price structure is so high it really becomes an impediment in the way of software adoption.”