INTERVIEW: Two things on Tech Mahindra CFO’s wishlist for the Budget 2021-22 that were left unaddressed

• Tech Mahindra CFO Manoj Bhat is happy with the budget but feels more could have been done to address the needs of the IT services industry specifically.
• Taxation, for instance, could have been simplified to ease the cost of doing business across multiple geographies.
• Since the IT services industry has been a huge job creator in India, it would also have been helpful if there were more incentives for employment generation.

India’s latest budget did acknowledge the role of technology in economic revival. For instance, the government plans to introduce e-courts for faster resolution of disputes. It also earmarked ₹1,500 crore to dole our financial incentives for digital transactions.

However, what the IT services players in India, like Tech Mahindra, HCL Technologies, Infosys, Wipro and Tata Consultancy Services (TCS), wanted to see was some relief on taxes and incentives for job creation. “I think the government has come up with a budget that is investment oriented. In a lot of ways that ticks a lot of the boxes. But, specifically for IT services, there’s nothing there,” Tech Mahindra CFO, Manoj Bhat told Business Insider in an exclusive interview.

Taxation is getting more complicated world over
The industry lobby, NASSCOM, hoped for some clarity on the tax framework with more employees working from home — a trend that many companies plan to stick to in some form or the other in the long run.

“As companies like us become larger and operate in so many countries, helping us work through some easier tax situations esp in international context whether its around transfer pricing or some of the other laws that are coming through would have been nice,” said Bhat.

Transfer pricing relates to the prices charged by different entities — located in different jurisdictions — for goods and services. The tax rules related to transfer pricing are complex. Governments, in India and abroad, are becoming increasingly proactive in scrutinising transfer pricing policies and practices.

The IT services industries is a big job creator
At a time when the Indian economy needs a demand boost, Tech Mahindra’s CFO also believes that the budget could have done with adding some incentives for job creation.

“That’s something they should consider perhaps in terms of continuing some of the benefits that were offered in the past few years that are no longer there,” said Bhat.

In the past, the sector has been a huge boon for creating new opportunities and helping the economy grow. NASSCOM estimates that the $200 billion industry created over 200,000 new jobs in 2019 — a year that saw massive unemployment in India.

“We require WFH to be enabled in SEZs (Special Economic Zones on a long-term basis. Since this requires movement of duty-free goods like laptops etc outside the SEZs, the Finance Ministry should provide the requisite clarifications under Customs and GST,” said NASSCOM in their pre-budget expectations.

Even though bigger players can do without the incentives, smaller and upcoming IT companies would have welcomed the relief.

The demand for talent is also on the rise as businesses that were once hesitant about going digital are bringing up their timelines to ensure that their customers can still reach them even if stepping out of the house isn’t an option.

SEE ALSO:
India becomes the first Asian country to allow small investors to directly lend to the government

ISRO will transform in 2021 as India pumps big money to draw in startups for the 'second space age'

New citizenship law pulls India down in the democracy rankings — and 2021 is not looking better