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BACK TO BUDGET HOMEPAGE

Budget 2010-11: Software


The Union Budget 2010-11 did not have much in store for the Indian IT sector. While the increase in MAT will increase the tax liability of the IT companies, decrease in surcharge and retention of service tax at existing levels are likely to have a positive impact. However the budget missed critical aspects like extending the tax-holiday under STPI at least for small IT companies and measures for preventing dual taxation of IT products. Nevertheless, the government’s focus on improving the delivery mechanism and operations of various development schemes through IT initiatives is a welcome move. Indian IT companies which have increased their focus on the domestic IT market have much to gain from increased usage of technology by the government.

 Budget Measures


  • Rate of tax on services retained at 10% to pave the way forward for GST.
  • Rate of minimum alternate tax (MAT) on book profits increased from 15% to 18%.
  • Current surcharge of 10% on domestic companies reduced to 7.5%.
  • Redefined export of services so as to simplify the process of refund of accumulated credits to exporters of services.
  • A Technology Advisory Group for Unique Projects (TAGUP) to be set up.

     Budget Impact


  • The increase in MAT from 15% to 18% is expected to further increase the tax liability of software companies and thereby erode their margins. This will particularly impact the cash flows of smaller companies which enjoyed lower tax-outlays under previous MAT policy.
  • Reduction in surcharge will lower the tax outgo. But the benefits generated through the reduction of surcharge are likely to be eaten up by increase in MAT. No extension of tax holiday under STPI scheme will corrode bottom-line.
  • Setting up of a Technology Advisory Group for Unique Projects (TAGUP) along with increased focus on e-governance will create more demand for IT in the domestic market. Increased allocation to the Unique Identification Authority of India (UIDAI) likely to benefit domestic IT players.
  • Simplification of refund process for exporters is likely to give some clarity in the issue. However no clarity given on the definition of software products which are usually treated as goods as well service may continue to lead to dual taxation.

     Company Impact


  • Hike in MAT will increase the effective tax-liability of small and mid-cap companies, impacting their bottom-line. No extention in terms of STPI and SEZ tax-holiday policy will pinch all the IT players as the previous SPTI scheme expires this year.
  • Budgetary focus on UIDAI, NREGA etc coupled with overall strategy of improving the delivery mechanism for government initiatives will benefit IT companies like TCS, Wipro, Infosys, Mindtree and 3i Infotech which consider the Indian IT market as a major growth driver going forward.
  • Budgetary emphasis on elementary education and skill development can aid growth of companies like NIIT and Educomp Solutions.

    Budget Impact: Software Sector Analysis for 2009  | Software Sector Analysis for 2011
    Latest:  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%)