Budget 2006: Negative impact on the growth of the Indian software industry.

Business Software Alliance (BSA) has announced that the 8% excise duty on software packaged and 12% hike in the service tax are destined to have a pessimistic impact on the growing process of the Indian software industry.

[ClickPress, Tue Mar 07 2006] According to BSA, increased software costs will upset the struggle against piracy, which in turn will have an antagonistic effect on the economy.

Ajay Advani, Co-chair of BSA India said, "Software is the driving strength behind growing process in the IT sector. Decrease the rate of software hijacking can boost the economy and create new jobs and business opportunities that create effort and new tax revenues. Involving the right policy choices, a new area of new idea, growth, and opportunity can extend widely throughout the country."

A recent IDC study imply that a simplification in the software hijacking by 10 points could have a meaningful effect on India's economy and could add 115,847 jobs, contribute $5.9 billion to GDP, $386 million in taxes and $8.2 billion in revenues to local seller.

The budget has not gone down well NASSCOM either, and the premier customers body and 'voice' of the IT software and service industry in India has also explicit concerns about the increase in levies on IT hardware and on Package software.

Observation on the adverse implications of the Union Budget, Kiran Karnik, President, NASSCOM said, "Increase in levies on IT hardware and on packaged software will result in higher prices and have a negative impact on millions of customers and on the domestic IT market. It will be a setback to attempt to promote IT utilization in the Indian economy and for crucial applications like health and education."

Karnik is of the estimation that increases in service tax and broadening the net to cover previously excluded IT-related services will not only raise costs, but also act as a deterrent to outsourcing work to SMEs.

Bookmark this release: Del.icio.us - Digg - Furl - Blinklist - Reddit