India Budget 2011-12 - negative for IT Startups
Finance Minister Pranab Mukherjee's 2011-12 Budget is very disappointing for IT Industry. In his determination to make companies and individuals pay more taxes, he has overlooked the fact that many IT companies have started working under SEZs and bringing SEZ enterprises under MAT is a huge negative for such companies.
State and Central Government has many policies/schemes for Manufacturing, Retail and Cluster businesses. IT Industry has been only having some relief under STPI and SEZ. Especially many startups avail MAT / TAX holiday under SEZ and this has helped them to sustain despite very high salary levels of employees.
Next year, with the DTC being implemented, there will be no profit linked incentives for any company and as such will be a level playing field for all players in the Industry. You cannot imagine then to start a new company in IT industry and expect that you will have some govt incentives for IT related startups. IT is gone! How can Finance Minister overlook all budding entrepreneurs and not have anything for them? On one side, govt is spending so much trying to encourage entrepreneurship growth and on other side, they are not even giving them breathing space to grow to a certain level before crucifying them under TAXES.
This budget is thumbs down for IT industry - BIG TIME!