The finance minister has made this budget as one of the most dynamic and 100 per cent IT friendly, said Dewang Mehta, Nasscom president. "This proves that the new ministry has been very helpful for the infotech industry", he adds. Nasscom is particularly elated about the fulfillment of its demand on ESOP taxation: "The most fundamental reasoning behind ESOP is to retain manpower, decrease brain-drain, and create wealth for individuals. This announcement by the finance minister will boost the the manpower development in the country", added Mehta. "I am thrilled with it. And our employees will be thrilled as well," says Arun kumar, president and managing director, Hughes Software Systems. Hughes is currently offering stock options to its employees. And according to Kumar, till now paying income tax on the shares given as stock options has been a big block in using ESOPs to motivate employees. "This is a step in the right direction. It will give more impetus to the ESOP plan," he adds.

In fact, Hemant Kohli, CEO, IT&T, whose company is planning to offer stock option to employees, feels that this is how it should have been right from the start: "ESOPs as perks were contentious. However as capital gains, they will make employees happier." Besides, holding and binding of the company on the employees will be greater, and it will help us offer ESOPs as incentives to motivate the employees, he adds.

"This is great news", enthuses Naresh Gupta, managing director, Adobe Systems India Private Limited. The finance minister has done the right thing for the knowledge industry, he adds. "This would make India one of the first companies to treat knowledge and capital at the same level", points out Gupta.

His views are also echoed by Akhil Chowdhary, managing director, Binary Semantics, who says that the move to make ESOPs free from multiple taxation, is a great new and a step in the right directio. "This was one thing we were lacking till now. Taxes should be taken only when liquidity comes in the hands of the people, when they sell the shares", explains Chowdhary.

"Taxing ESOPS was an aberration so far and I am glad this is being done away with" says Rashesh Shah, CEO, Edelweiss Capital, while reacting to the development.

Meanwhile, the decision to make venture capital funds pass-through has also found favour in the industry. Now venture capital funds will not have to pay tax on distributed and undistributed profits and tax will only have to be paid by the investor as per his status.

According to Nasscom, now that the differentiation between the overseas and domestic venture capital funds has been removed, we expect at least US $3 billion worth of venture capital money to come into the country in the next two years.

Kumar from Hughes also feels that this will put India at par with rest of the world. According to him, unlike now when notional gains are being taxed, this move will ensure that the venture capitalists are taxed only when they harvest (when they actually get the money).

Kohli, whose company (IT&T) also offers incubation funds also feels that this move will boost the venture capital fund movement in the company. Reacting to the decision, Mahendar Nahata, director, HFCL Group, also said that this incentive to venture capital fund will go a long way to provide seed capital to entreprenuers in the country.

Neeraj Batra, managing director, Infinity Trust Investments, also welcomed the move, saying it will help the industry in the long run. However he also said that it may not have the desired effect of bouying up the sentiments of the stock market. "This is because the principal assets, the dotcoms have lost a lot of glitter in the past month," he added.

However to Raj Kondur, director, Chrysalis, an India- specific venture fund, "this move makes complete sense. The regulatory framework for venture capital funds is now on par with international norms. This is indicative of the government's commitment to sectors like IT," he added.

Reacting to Sinha's announcement, Minakshi Sundaram of Walden Nikko India said "I think there will be a surge in India specific funds being instituted, simultanously there should be a growth in India based funds as well".