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Budget 2009-10: Software


The Indian IT sector which saw a phenomenal growth of over 30% per annum till last year, is one of the sun-shine sector of the economy. The sector got impacted by the global meltdown as revenues decreased on account of subdued demand and pricing pressure. Nevertheless, the sector clocked export revenue of US $ 40.3 billion, growing at a decent 17% in FY09. It is combating the slowdown through diversification in terms of geographies and industry verticals and a change in business model. On back of robust customer relations, strong deal-pipelines, increased domestic demand and improved business models, the Indian IT industry stay poised to weather the global downturn and emerge out stronger. Government policies play an important role in the growth of the IT-BPO sector which has been contributing significantly to India's export earnings.

 Budget Measures


  • Sunset clauses for deduction in respect of export profits under sections 10A and 10B of the Income-tax Act being extended by one more year i.e., 2010-11.
  • On packaged or canned software, excise duty exemption to be provided on the portion of the value which represents the consideration for transfer of the right to use such software, subject to specified conditions.
  • Fringe benefit tax (FBT) abolished.
  • Rate of minimum alternate tax (MAT) on book profits has been increased from 10% to 15%, but with a provision of carrying forward the tax credit on MAT to ten years from the current seven years.

     Budget Impact


  • One year extension of sunset clause for tax deduction will enable the IT setups in the STPIs and SEZs to enjoy the tax-holiday for one more year.
  • Abolition of FBT is expected to decrease the tax liability of organizations, thereby aiding their net profits. This will also encourage employers to provide better facilities and benefits to the employees.
  • Exemption of service tax on packaged software to prevent the double-taxing where-in the service provider had to pay excise duty or countervailing duty (CVD) as well as service tax, resulting in an increase in prices of such software.
  • The increase in MAT from 10% to 15% is expected to increase the tax liability of the companies and thereby decrease their net profit figures. This will particularly impact SMEs in the sector which enjoyed lower levels of tax-outlays under previous MAT policy. Nevertheless, the increase in carry-forward window to 10 years to have a positive impact.

     Company Impact


  • Extension of tax-holiday under STPI scheme likely to help big IT companies like Infosys, TCS, Wipro and Tech Mahindra having setups in Special Economic Zones (SEZs). Though the extension of just one year will not help small and mid-cap IT companies in a very big way.
  • FBT abolition will benefit the IT companies immensely. This will make ESOPs more attractive.
  • The removal of CVD on packaged software will result in decrease in price of such products benefitting the IT companies which use these softwares extensively.
  • Hike in MAT will increase the effective tax-liability of small and mid-cap companies, impacting their bottom-line.
  • Budgetary focus on projects like Unique Identification for Indian citizens, e-passport, NREGA etc will benefit Indian IT companies like TCS and Infosys through increased domestic demand for IT and ITES.

    Budget Impact: Software Sector Analysis for 2008 | Software Sector Analysis for 2010
    Latest: Performance Of Software Stocks | Software Sector Report



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    Sector Performance
    COMPANY PRICE (Rs)
    3I INFOTECH 39.8
    (1.1%)
    63 MOONS TECH 383.5
    (0.5%)
    AAA TECH 75.0
    (4.2%)
    AASHEE INFOTECH 1.4
    (4.4%)
    ACCELERATEBS INDIA 315.0
    (5.0%)
    ACCELYA SOLUTIONS 1,702.0
    (-1.1%)
    ADJIA TECH 34.0
    (4.3%)
    ADROIT INFOTECH 15.0
    (0.3%)
    ALL E TECHNOLOGIES 253.0
    (8.0%)
    ALLIED DIGITAL 140.6
    (0.1%)
    ALLSEC TECHNOLOGIES 728.0
    (0.4%)
    ALPHALOGIC TECHSYS 80.0
    (1.8%)
    APTECH 230.4
    (-3.2%)
    ARCHANA SOFTWARE 97.9
    (-5.0%)
    ATISHAY 72.9
    (3.3%)
    AURIONPRO SOLN 2,205.0
    (3.0%)
    AVANCE TECHNOLOGIES 1.3
    (-4.5%)
    AVANTEL 98.8
    (-0.2%)
    AXISCADES ENG. 549.0
    (0.4%)
    BARON INFOTECH 0.8
    (0.0%)
    BARTRONICS INDIA 17.7
    (2.0%)
    BHARATIYA GLOBAL 4.2
    (-4.9%)
    BIRLASOFT 742.5
    (-2.3%)
    BITS INDIA LIMITED 3.4
    (-2.0%)
    BLS INFOTECH 3.3
    (-2.6%)
    BLUECLOUD SOL 52.3
    (-5.8%)
    BNR UDYOG 51.7
    (-2.0%)
    BODHTREE CONSULTING 6.0
    (4.9%)
    CALIFORNIA SOFTWARE 14.0
    (-2.8%)
    CAMBRIDGE TECH 82.6
    (-4.7%)
    CANARYS AUTOMATIONS LTD. 28.9
    (-1.0%)
    CE INFO SYSTEMS 1,871.9
    (2.9%)
    CIGNITI TECHNOLOGIES 1,266.9
    (0.8%)
    COFORGE 5,496.3
    (-1.0%)
    COMPUCOM SOFTWARE 23.5
    (-1.8%)
    CONTINENTAL CHEM 75.0
    (5.0%)
    COSYN 34.8
    (-1.1%)
    CRANES SOFTWARE 3.2
    (-1.5%)
    CYBERTECH SYST. 138.1
    (0.3%)
    CYIENT 1,988.0
    (2.4%)
    D-LINK (INDIA) 270.0
    (-2.2%)
    DANLAW TECHNOLOGIES 1,871.8
    (5.0%)
    DATAMATICS GLOBAL 537.0
    (0.7%)
    DATASOFT APPLICATION 20.6
    (2.0%)
    DC INFOTECH AND COMMUNICATION 54.3
    (7.4%)
    DELAPLEX LTD. 219.0
    (-1.6%)
    DRC SYSTEMS 20.4
    (5.0%)
    DUCON INFRATECHNOLOGIES 7.1
    (-4.9%)
    DYNACONS SYSTEMS & SOLUTIONS 1,011.0
    (7.9%)
    E.COM INFOTECH 93.6
    (-3.1%)
    E2E NETWORKS 1,091.0
    (2.7%)
    ECLERX SERVICES 2,377.2
    (-0.4%)
    ECS BIZTECH 8.4
    (-4.0%)
    EKENNIS SOFTWARE 100.0
    (-2.0%)
    EKI ENERGY SERVICES 274.9
    (-6.0%)
    EMUDHRA 750.1
    (2.3%)
    ENSER COMMUNICATIONS LTD. 64.5
    (-1.1%)
    EQUIPPP SOCIAL 29.2
    (-0.8%)
    EUPHORIA INFOTECH (INDIA) LTD. 55.1
    (-5.0%)
    EXPLEO SOLUTIONS 1,210.0
    (0.0%)
    FCS SOFTWARE 3.7
    (1.4%)
    FIRSTOBJECT TECH. 5.7
    (0.2%)
    FIRSTSOURCE SOLUTIONS 197.9
    (-0.0%)
    FOCUS BUSINESS 62.9
    (-5.0%)
    FOURTH GEN. 5.5
    (0.0%)
    G-TEC JAINX EDUCATION LTD. 76.0
    (0.0%)
    GENESYS INTL. 596.0
    (11.7%)
    GLOBALSPACE TECH. 18.5
    (-4.9%)
    GLOBESECURE TECHNOLOGIES LTD. 39.6
    (-1.6%)
    GSS INFOTECH 125.5
    (-2.0%)
    HAPPIEST MINDS TECHNOLOGIES 742.0
    (-1.3%)
    HCL TECHNOLOGIES 1,547.8
    (0.0%)
    HIT KIT GLOBAL 1.0
    (4.4%)
    HRH NEXT SERVICES LTD. 28.5
    (-4.4%)
    HYPERSOFT TECH. 7.4
    (0.8%)
    ICICI PRU IT ETF 37.4
    (1.6%)
    INDIAN INFOTECH 1.4
    (4.5%)
    INFIBEAM AVENUES 34.2
    (-1.8%)
    INFO EDGE 5,497.4
    (0.4%)
    INFORMED TECHNOLOGIES 55.8
    (-0.0%)
    INFOSYS 1,495.0
    (0.7%)
    INFRONOICS SYST. 58.0
    (-2.9%)
    INNOV.SOFTW. 5.0
    (0.0%)
    INNOVANA THINKLABS 540.0
    (-0.3%)
    INTRASOFT TECHNOLOGIES 110.0
    (1.0%)
    ISHWAR TEXTILES 56.0
    (0.0%)
    IZMO 270.0
    (2.5%)
    JETKING INFOTRAIN 48.3
    (-7.2%)
    JOINTECA EDU. 12.3
    (4.9%)
    JONJUA OVERSEAS 10.1
    (-0.5%)
    JUPITER INFOMEDIA 36.2
    (-1.4%)
    KANDARP DIGI SMART BPO LTD. 23.9
    (6.2%)
    KERNEX MICROSYS 560.0
    (-1.7%)
    KODY TECHNOLAB LTD. 950.0
    (-0.7%)
    KPIT TECHNOLOGIES 1,482.0
    (-0.1%)
    KSOLVES INDIA 1,115.0
    (-0.2%)
    L&T TECHNOLOGY SERVICES 5,454.2
    (0.1%)
    LATENT VIEW ANALYTICS 506.1
    (9.6%)
    LCC INFOTECH 1.9
    (-4.1%)
    LTIMINDTREE 4,942.0
    (0.3%)
    MAHAVEER INFOWAY 8.7
    (5.0%)
    MAJESCO 130.0
    (-0.7%)
    MASTEK 2,560.0
    (1.9%)
    MEGASOFT 89.3
    (5.0%)
    MEGRI SOFT 101.9
    (-3.0%)
    MICROPRO SOFTWARE SOLUTIONS LTD. 41.4
    (-3.7%)
    MINDPOOL TECHNOLOGIES 85.0
    (0.0%)
    MINDTREE 3,433.4
    (0.1%)
    MOSCHIP SEMI 88.4
    (-0.5%)
    MPHASIS 2,391.1
    (-0.4%)
    MRO TEK. 71.1
    (-0.2%)
    MULTI-PURPOSE 9.5
    (-5.0%)
    NAAPBOOKS 230.0
    (-1.8%)
    NAZARA TECHNOLOGIES 663.5
    (0.5%)
    NETRIPPLES SOFTWARE 5.5
    (0.0%)
    NETTLINX. 116.0
    (-0.5%)
    NETWEB TECHNOLOGIES 1,609.0
    (-1.5%)
    NETWORK PEOPLE SERVICES TECHNOLOGIES LTD. 1,141.9
    (4.9%)
    NEWGEN SOFTWARE 793.4
    (0.8%)
    NHC FOODS 33.9
    (-4.0%)
    NIIT 105.8
    (-2.5%)
    NIKS TECHNOLOGY 477.4
    (-5.0%)
    NINTEC SYSTEMS 490.9
    (1.8%)
    NOUVEAU GLOBAL 0.5
    (0.0%)
    NUCLEUS SOFTWARE 1,190.0
    (-1.7%)
    OBJECTONE INFO 16.6
    (0.1%)
    OCTAWARE TECHNOLOGIES 49.8
    (-1.8%)
    OLATECH SOLUTIONS LTD. 144.4
    (5.0%)
    OMNI AX`S SO 3.1
    (-3.8%)
    ONMOBILE GLOBAL 59.7
    (-2.2%)
    ONWARD TECHNOLOGIES 446.0
    (3.0%)
    ORACLE FINANCIAL 8,783.0
    (-0.2%)
    PALRED TECHNOLOGIES 119.0
    (-0.8%)
    PANACHE DIGILIFE 74.0
    (-4.5%)
    PARLE SOFTWARE 7.9
    (-1.5%)
    PATNI COMPUTERS 515.8
    (-0.1%)
    PE ANALYTICS 286.0
    (-1.0%)
    PERSISTENT SYSTEMS 3,998.0
    (-50.6%)
    PFL INFOTECH 4.2
    (-5.0%)
    PLADA INFOTECH SERVICES LTD. 24.5
    (-3.0%)
    PLATINUMONE BUSINESS SERVICES LTD. 183.5
    (-3.0%)
    PROTEAN EGOV TECH 1,003.0
    (0.1%)
    QUADPRO ITES LTD. 5.0
    (0.0%)
    QUANTUM BUILD 3.6
    (1.7%)
    QUESS CORP 516.3
    (0.0%)
    QUEST SOFTECH 36.2
    (-4.3%)
    QUICK HEAL TECHNOLOGIES 468.2
    (-0.8%)
    QUICKTOUCH TECHNOLOGIES LTD. 190.0
    (-0.5%)
    QUINTEGRA SOLUTIONS 2.1
    (3.0%)
    R.S.SOFTWARE 192.5
    (2.0%)
    RAMCO SYSTEMS 264.5
    (-1.7%)
    RATEGAIN TRAVEL TECH 726.0
    (-6.2%)
    RCC CEMENTS 12.6
    (4.9%)
    RESPONSE INFOR. 81.7
    (4.9%)
    ROLTA INDIA 4.8
    (2.8%)
    ROX HI-TECH LTD. 102.0
    (-0.8%)
    SAGARSOFT (INDIA) 199.4
    (1.6%)
    SAHANA SYSTEM 836.1
    (-4.4%)
    SAKSOFT 252.7
    (3.0%)
    SANCODE TECHNOLOGIES 77.2
    (5.0%)
    SANMIT INFRA 10.8
    (-5.0%)
    SASKEN TECHNOLOGIES 1,504.0
    (0.1%)
    SAVEN TECHNO 64.0
    (-0.4%)
    SCANPOINT GEOM. 6.4
    (-3.0%)
    SECMARK CONSULTANCY 97.0
    (-1.0%)
    SECUREKLOUD TECHNOLOGIES 36.2
    (-5.0%)
    SENTIL INFOTEK 12.8
    (4.9%)
    SEQUEL E-ROUTERS 154.8
    (1.9%)
    SIGMA SOLVE 355.2
    (-0.5%)
    SOFTSOL INDIA 268.3
    (2.0%)
    SOFTTECH ENGINEERS 298.0
    (4.4%)
    SONATA SOFTWARE 739.0
    (-0.5%)
    SOUTHERN INFOSYS 17.4
    (0.0%)
    SPACE INCUBATRICS TECHNOLOGIES 1.9
    (-1.6%)
    SPACENET ENTERPRISES 25.9
    (-0.4%)
    STARCOM INFO. 58.4
    (-5.0%)
    SUBEX 30.2
    (3.0%)
    SUVIDHAA INFOSERVE 5.7
    (-4.8%)
    SYLPH TECH. 2.7
    (3.5%)
    SYSTANGO TECHNOLOGIES 309.0
    (1.8%)
    TAKE SOLUTIONS 20.5
    (-4.9%)
    TANLA PLATFORMS 818.0
    (0.3%)
    TATA ELXSI 7,747.9
    (1.0%)
    TCS 3,878.2
    (1.1%)
    TECH MAHINDRA 1,245.0
    (-0.7%)
    TECHNVISION VENTURES 1,580.8
    (2.0%)
    TELESYS SOFT 8.9
    (-4.4%)
    TERA SOFTWARE 45.7
    (-5.0%)
    TRACXN TECHNOLOGIES 85.9
    (0.3%)
    TRANWAY TECHNOLOGIES 6.7
    (3.1%)
    TRIDENT TECHLABS LTD. 240.0
    (3.1%)
    TRIGYN TECHNOLOGIES 93.0
    (-0.8%)
    TYCHE INDUSTRIES 177.0
    (-0.3%)
    USG TECH SOLUTIONS 7.5
    (3.0%)
    USHA MARTIN EDUCATION 4.6
    (-4.9%)
    VAKRANGEE 19.9
    (-1.2%)
    VCU DATA 6.6
    (0.5%)
    VEDAVAAG SYSTEMS 47.3
    (2.5%)
    VEEFIN SOLUTIONS 307.0
    (4.7%)
    VERTEXPLUS TECHNOLOGIES LTD. 141.8
    (5.0%)
    VINSYS IT SERVICES 318.0
    (1.8%)
    VIRGO GLOBAL 8.3
    (0.2%)
    VIRINCHI CONSULTANTS 31.2
    (2.1%)
    VIVO COLLABORATION SOLUTIONS LTD. 73.2
    (-5.0%)
    WE WIN 66.7
    (0.6%)
    WEP SOLUTIONS 38.2
    (3.3%)
    WHERRELZ IT SOLUTIONS 123.4
    (-5.0%)
    WIPRO 480.6
    (1.8%)
    XTGLOBAL INFOTECH 42.5
    (1.9%)
    ZEE LEARN 6.1
    (-0.5%)
    ZEN TECHNOLOGIES 953.5
    (1.8%)
    ZENOTECH LABS 59.0
    (0.6%)
    ZENSAR TECHNOLOGIES 603.3
    (-0.4%)