It's a good budget, from a corporate and a citizenpoint of view. First, it has provided the right stimulus to the capitalmarket by waiving of corporate surcharge, reducing the dividend tax. Second,there will be more opportunities for companies to go in for an overseaslisting as the proceeds can be used for acquisition. The budget haspermitted companies issuing ADR/GDRs to make foreign investments up to 100per cent of the issue proceeds; a considerable hike from the current ceilingof 50 per cent.Also, the companies that had issued ADR/GDR's may acquire shares of foreigncompanies up to an amount of $100 million or an amount equivalent to tentimes of their exports in a year. The two-way fungibility is a good move.
The impetus given to the telecommunication infrastructure is good. The fiveyear tax holiday to Internet Service Providers and broadband providers willencourage investments in infrastructure. Also, there has been no tax one-commerce and software services which is good thing.
On the flip side, a service tax on leased circuits has been introduced.Internet service providers are the largest customers for leased circuits.
This service tax would increase the cost of operations. We have to see ifthe increased costs can be passed on to the customers. Online access of paiddatabase services is being taxed-which may be premature.
(R Ramaraj is CEO, SIFY)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
