The budget has a mixed bag for the IT industry. While an 8% excise duty has been imposed on packaged software sold over the counter, and a 12% excise on personal computers, local PC manufacturers can offset the duty on components by claiming Cenvat credit.

However, the 8% excise duty on packaged software has not gone down well with the IT sector. According to Neelam Dhawan, MD, Microsoft India, the duty would lead to increase in piracy and prices. Javed Tapia, director of Red Hat, says, "Software costs will rise and make them unaffordable."

Nasscom terms this as a 'serious concern'." At a time when sub-Rs 10,000 computers are being launched, this move does not do any good to domestic players," says Kiran Karnik, Nasscom president. T V Mohandas Pai, CFO of Infosys Technologies, says, "I think it's a very retrograde step, as it'll affect domestic software manufacturers."

Interestingly, the budget exempts customised software and software packages downloaded from Internet from any duty. Vinay Deshpande, chairman and CEO of Encore Software, feels this is a smart move as "it could encourage domestic companies to progress towards e-commerce."

Regarding the 12% excise duty on PCs, Anil Jain, VP of Wipro PC, says, "The excise duty will help local manufacturing. If you manufacture a PC here, you can offset the customs duty and claim that as Cenvat."

Says Ram N Agarwal, MD, director and CEO, WeP Peripherals Ltd, "Fully imported PCs and laptops will be costlier because they would carry an excise of 12% and 4% CVD."

 ( http://timesofindia.indiatimes.com)