IT, ITeS sectors expect tax relief in Budget

The IT and ITeS sectors expect a reduction in minimum alternate tax (MAT) and dividend distribution tax in the next month's Union Budget, a senior economist said on Tuesday.

"In order to boost overseas shipments and domestic manufacturing from special economic zones (SEZs), the IT and ITeS sectors expect a reduction in minimum alternate tax and dividend distribution tax (DDT) applicable on such zones," Dun & Bradstreet India's Senior Economist Arun Singh said.

The Narendra Modi led goverment's first Budget is likely to look at reduction of special additional duty (SAD) on computer components such as memory, chassis and battery used by the desktop/laptop manufacturers, he said.

This move would help revive the subdued demand and promote manufacturing in the country, Singh added.

Since the introduction of MRP-based valuation in respect of IT products, duties on them have increased even though the MRP abatement percentage for such items has remained at 20 per cent.

The current rates of excise duty, sales tax and other operating costs like logistics and dealer margins, take the total post manufacturing costs over and above the abatement percentage in respect of IT products, he maintained.

In view of this scenario, the abatement percentage is expected to be enhanced in the General Budget for 2014-15 to be presented on July 10, Singh added.