Delay in GST does not gel with channel

When Pranab babu stood up to read his budget speech the country waited to see
what will the experienced FM will have in store for the IT sector. The channel
community was particularly looking forward to changes in central and state taxes
since they have been battling numerous layers of taxes for almost two years now.
DQ Channels team spoke to channel partners across the country to gauge their
first reactions on the budget and the IT channel gave a thumbs down to Budget
2010.

When contacted Rajendra Seskaria, Director of Kolkata-based Balaji Solutions
was enthusiastic about the lowering of income tax. "In my pers-pective, the
Union Budget for this year has been wonderful, especially on the income tax
front. The government has come up with means to reduce the impact of the rising
prices on the consumers by its income tax slab. This is good news, especially
for the middle-class families. Also, the excise duty, which has been raised is
just a nominal rate of two percent."

Agreeing with his point of view, VK Bhandari, Director, Supertron Electronics
said, "The marginal rise of excise duty by two percent will not deter the
business functionality and removal of the upfront refund-able payment of four
percent has been done away with. Now, while paying for the excise, the companies
will not have to stock their circulating money and seek refunds on the same. So,
it will benefit the firms indirectly."

L Ashok, Director, Futurenet Technologies, Chennai, said, "Hike in excise
would definitely impact the pricing of goods like IT hardware and this may
result in more cautious buying by the customer." Commenting on the rise of
petrol prices, PL Suhasaria of Caltron said that the MRP may rise due to this,
but that will not have any added effect on the MOP. Krishna Agency's Naveen
Gupta said, "With the petrol price hike the logistical and transportation cost
will go up, which in turn will pull the MRP up. However, I expect that this will
not really affect the MOP and it may only rise up marginally."

The deferring of the implemen-tation of GST to April 2011 was met with
understand-ing from some parts of the channel community. "GST implemen-tation
takes time. It would have been better, had the GST been implemented, but the
government has its constraints. Implementing GST may have opened up new business
avenues, but non-implemen-tation will not leave the businesses paralyzed
either," said Suhasaria. Saket Kapur of Delhi-based Green Vision said, "There
was no way that the government could have implemented it this year. At present,
the tax scenario is messy for the partners in various aspects, but all this
would be gone once GST is implemented." Echoing Kapur's sentiment, Alok Gupta of
Softmart Solutions said, "The delay in the implementation of GST was something
we knew already, so there is nothing too surprising there." Atul Hemani,
Director, Omnitech InfoSolutions explain-ed why GST has yet again been delayed,
"It seems such that there are different countries within India, with each
charging their own tax rate. A single taxation system is the need of the hour."

Abraham Chaly, Director, Divya Business Systems, remarked, "The postponement
of GST again proves that this government has a history of postponing decisions
and it is not a good practice." Rajeev Khanna, President, JCDA said, "Though we
were waiting for GST to be implemented, we knew a month ago that the
implementation would be delayed. At present, one state is trying to outdo the
other in increasing the tax rates."

Talking about the hike in MAT rates, Rajesh Mathkar, Director, Wysetek
Systems said, "As far as hiking MAT is concerned, it will not have a huge impact
on SIs and SPs like us but it seems to be more oriented toward larger
enterprises of the world." Adding to the point, Sandeep Parasrampuria, Director,
iBall said that it will definitely not affect the small and mid-sized companies.
Ashok of Futurenet Technologies, Chennai, "Overall it has been a normal budget
with nothing specific to really boost growth however one disappointment from our
perspective is that nothing has been mentioned on the removal of dual taxation
when it comes to packaged software."

Summing it up, Puneet Singhal, President, CMDA said, "To my knowledge, the IT
sector was not even mentioned in the FM's speech. So, I do not really know what
it holds for the industry. In my opinion, I donot see GST happening even in
2011. But,once it does, it will provide lots of benefits to traders in the IT
industry."

With inputs from Bharat Sharma in Delhi, Avishek Rakshit in Kolkata and John
Jacob in Mumbai