Budget Reactions_Infinite Computer Solutions - MD

*Reactions to Union Budget 2009-10*

*Mr. Upinder Zutshi, MD, Infinite Computer Solutions *

The Union Budget 2009-10 has been promising, with a pragmatic approach in
terms of taxation and some measure of economic stimulus. There has been a
lack of big announcements in terms of disinvestments by the government,
Increase of FDI etc. However, there has been a hint, through mention of the
committee to explore the FDI limit in insurance as well as the importance of
FDI and disinvestment (with the figures of the non-tax revenue expectations)
and this has raised hopes of some development in these areas in the near
future

· The beneficial tax treatment extended under Section 10A and 10B of
the Income tax act (under the STPI scheme) has been key to the rapid growth
of the Indian IT industry. This was set to expire in 2010 and if not
extended, would have made the Indian IT sector lose competitiveness against
the emerging IT countries. The extension of this scheme is an important and
necessary step to ensure continued growth for this sector. Further, the
long-awaited clarification on vital definitions on this point can prove to
be highly beneficial

· Another step highlighted in the budget relates to the imperative
increases in infrastructure investments. It is paramount that there is
adequate investment in Infrastructure and Facilities (for example
Transportation, Communication Infrastructure, Electricity etc) in order to
enable growth of the industry. The boost in infrastructure expenditure would
enable growth to smaller towns with the addendum benefits.

· The boost in government IT expenditure, with announcement of key
projects would assist the domestic IT industry in part to tide over the
global reduction in demand and is seen as a positive

· The Union Budget announced this morning has key implications for
the employee, who would now benefit from the removal of the Fringe Benefit
Tax as well as surcharge on income tax, ensuring more disposable income.
This promises to stimulate domestic spending.

· There has been an increase in focus (and spending) towards higher
education and R&D investments. This will enable India in maintaining
availability of a highly skilled labor force as well as ensuring adequate
emphasis in R&D.

· With encouraging reforms such as removal of customs on packaged
software products etc, the Finance Minister has ensured in part that the
services of the Indian IT sector meet the requirements of the demanding
international customer

The overall budget appears positive with key announcements that would
provide the much needed stimulus to the economy. The fiscal deficit is
marginally higher than expectations but reiteration of commitment towards
fiscal responsibility is encouraging. A distinct lack of an overall roadmap
was missed but the union budget has provided guidance in this regard

*(Please note: Attached is Mr. Zutshi's profile and photograph for your kind
perusal.)*

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Warm Regards

Deepti Iyengar V

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