The Telegraph
Since 1st March, 1999
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Personal computers to come cheaper

New Delhi, Feb. 28: Personal computers will cost about Rs 500-Rs 800 less and bandwidth related services like streaming videos and high-speed internet connection from basic service operators will cost less.

Presenting his first Union budget today, finance minister Jaswant Singh kept the information technology and telecom service providers and the manufacturing sector happy by retaining the tax sops and reducing customs duty.

The concessions given to the IT sector under Section 10A and 10B of the Income Tax Act have been retained. “IT is India’s showpiece success story. We do not just maintain its momentum of growth, but continuously encourage it,” Singh said.

In addition, the Budget 2003-04 has extended the exemption benefit to those companies that are acquired by another company.

“The finance minister has shown a greater accountability and investor confidence in the stock markets and for creating an environment conducive for wealth generation via increased mergers and acquisition activity,” said Arun Kumar, president and managing director, Hughes Software Systems.

The move is bound to help the various small IT companies that had been facing financial crunch. “This was the only source of investible resource generation for small and medium companies. This is further helped by making income from dividends not taxable in the hands of the receiver.

“SME software exporting companies are likely to contribute $ 14 billion in exports by 2005 and generate an additional employment of over 1,50,000 by that time,” said Sameer Kochhar, CEO of Skoch Consultancy Services.

In addition, the demand of the hardware industry to exclude excise duty imposed on software loaded on PCs. “As software is already exempt from excise duty, I see no reason why this benefit should be denied simply because it gets loaded in a computer,” said Singh.

Kochar said, “The removal of excise duty on preloaded software on PCs and reduction of some component duties will make branded PCs cheaper by up to Rs 800. Typically, software adds to 10 per cent of cost of a branded PC at the entry level. This would also narrow the price gap between the branded PCs and the grey market. The grey market uses pirated software and pays no excise duty.”

“The continuation of income tax benefits for investments in R&D and new product development is a welcome move as this will give impetus to design activities, technology development and IPR creation in the industry,” said Vinnie Mehta, secretary general of MAIT.

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