As expected, the services industry is not too happy with the Budget proposalof a 5 per cent tax on a slew of services, including on-line information anddatabase access/retrieval, broadcasting services (radio and TV), servicesauxiliary to insurance, service stations, banking and other financialservices.According toCyquator CFO Prabal Banerjee, "the service tax on `dataretrieval and hosting services' will make them costlier. This should havebeen avoided, especially when we are trying to grow in our business." Hesaid international players, especially from the US and Europe, come here toout-source their value-added managed services in relation to the datacentres, and the imposition of tax will now compel these customers to lookforward to other nations like China.
Mindtree Consulting chairman and CEO Ashok Soota said, "taxing onlinedatabases, where India is a leader, could have been avoided." However,others like Global Telesystems chief Manoj Tirodkar said the service taxdoes not bother him much, since it can be passed on to consumers. Says ZeeTelefilms CEO RK Singh, "the Budget has not defined what these broadcastingservices are. It could be anything from uplinking to broadcasting. Theservice tax clause is not likely to have a major impact on Zee."
But that's not the only view on this. According to Al-Hind and Falak (twochannels soon to be launched) CEO Santosh Bhartia, although broadcasterswould have been better off without the service tax, it has a positive side.
For instance, at least IT and entertainment have now been brought closer bybringing the two under the same service tax net, he said.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
