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IT-BPO industry disappointed with the Indian Union Budget 2008

Indian IT-BPO industry has expressed their disappointment with the Indian Union Budget 2008, as they have not got the expected tax reliefs to counter the impact of a sharply appreciated rupee.

Nasscom has registered it's disappointed with the absence of any discussion on the extension of the STPI scheme. NASSCOM feels that it is extremely critical for small enterprises and the BPO industry, as well as for expansion in tier 2 and tier 3 cities as they are unable to avail the benefits of the SEZ scheme. The STPI benefits are available till March 31 2009. Industry estimates suggest this could cut profitability by up to 5% when the tax holiday ends.

The imposition of service tax of 12% on customised software and higher excise duty on packaged software could lead to increased cost of IT and could slow down the IT usage in the domestic sector. This impacts in particular, small and medium enterprises who have just started deploying IT.The increase in excise duty for packaged software will also lead to increased piracy, according to industry.

2.However, Nasscom has welcomed the thrust on primary and higher education and skill building initiatives. The Sarva Shiksha Abhiyan, increased allocations for higher education and the creation of the Skill Development Mission with the announcement of Rs. 1,000 crore as Government's equity in this proposed non-profit corporation will ensure constant supply of employable workforce to this sector. Interconnecting the knowledge institutions through broadband would also establish synergies across educational institutions.

New initiatives on setting up rural service centres and state data centres would also help take the benefit of IT to the masses.

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