Union Budget: step mom like behaviour towards Indian IT firms and BPOs

After a money shower on sports, agriculture and mass relaxation in tax we have perhaps overlook the darker side of this union budget. Recently in a news program in CNN IBN 7, it is revealed that many IT firms of India are planning to move Singapore, Malaysia to cut short the spending. After this budget, the professional tax for Indian IT firms is 22-23% whereas in Malaysia its 15-18%, the land property tax is also very high in comparison to Malaysia and Singapore. This is to mention that a lion part of Indian revenue is generated by Software firms and BPOs. Now after this recent development in Union Budget suggests that there will be no exemption in SEZs/SEMs after 2009, so mid-level IT companies are moving to countries like Malaysia, Philippines.

Here, at this point, our finance ministry should ponder over one thing that is this a positive move to impose high taxes on IT companies as it is the most revenue generating industry and also highest job generating industry as well. If this decision persist for a long then again we will see brain drain like early ‘80s when most of our intelligence fled to USA.

Don't be so relaxed with taxes...it may go up from 2009/10

After a juicy union budget from Finance Minister Mr.P.Chidambaram, we all are very happy...as many of us could have manage to get pass with income taxes. But this may be for a fortnight as some financial experts fear to have some adverse effects.

V. Balakrishnan, Chief Financial Officer, Infosys Technologies, predicted that taxes going upward to 22 percentage in the financial year 2009/10 from about 15 percentage now, if a 10-year taxation vacation ends in March 2009

India's export-driven software services sector had sought the extension of the Software Technology Park of India strategy beyond 2009, particularly for the welfare of tiny amd medium firms, in the federal budget. The proposition did not discover any reference in Finance Minister P. Chidambaram's 2008/09 budget on Friday.

"We will come under full tax regime in 2010," he said. "From 15 percent it will go to 22 percent, the effective tax rate."
The high taxes would get an influence of 2.5-3 percentage for the complete year on the earnings margins of India's second-largest software services exporter, he said.