Budget wish list: IT, ITes & e-commerce

Recent developments in the US and UK could impact growth for the Indian IT sector

Industry size

Approx:  $143  bn (IT – ITeS) plus $17 bn (e-commerce)

Employment figure: Approx 3.9 million

Contribution to GDP: About  9.3%

Key issues or areas of concern for the sector 

Global political uncertainty due to the recent developments in the US and UK could impact growth for the Indian IT sector as these are one of the largest markets for the Indian IT-ITeS companies. Given that emphasis could be to create jobs in the US could have negative influence on outsourcing of jobs from outside the US, which in turn could have implications on mobility of IT specialists.

The new GST law poses multiple challenges for e-commerce firms, especially around compliance and related formalities, with e-commerce platform being liable to collect TCS (tax collected at source) on supply of goods and services by supplier.

Due to significant automation and changes in technology, employees are being re-skilled, and work culture is witnessing a major shift with enhanced focus on digital skills and just-in-time training.

Budget 2017  : Industry demands

Defer applicability of Place of Effective Management and clarify provisions around claim of foreign tax credit

Definition of Equalisation Levy is ambiguous and clarity is required. There is absence of clarity on availability of credit. Notification has to be issued to clarify that the levy is in nature of tax and eligible for credit.

PwC POINT OF VIEW

Sandeep Ladda, Partner and Leader, Technology & eCommerce

Sandeep LaddaSandeep Ladda, Partner and Leader, Technology & eCommerce

The government should provide tax concessions and rebates to consumers and businesses to promote digital payments in-line with recent efforts of making India a cashless economy.

There should be clarity on indirect tax laws affecting e-commerce players, especially around tax collected at source, service tax on aggregators, and levy of service tax and VAT on delivery charges.

Shashank ND, Founder of Practo Technologies, a health technology company

From the health care point of view, it will be good to see if the government will increase the 60-million base private health insurance. Health insurance should become a basic necessity. Many people go bankrupt because they can’t afford health care. From a start-up point of view, the government had done a pretty big event last year — Startup India, Standup India. I would love to know what has been the outcome of that and the ~10,000-crore fund of funds that was allocated. All of us in the start-up ecosystem will be looking forward to seeing India as a destination for IPOs. How the govt plans to make it happen will be very interesting because it will further innovation. The government should do whatever it can to help companies with Indian management. However, they should know where to draw a line.

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