Proposed budget will reduce the spread of digital connectivity: Syed Almas Kabir

Syed Almas Kabir, FBCCI advisor and former president of BASIS, feels that the proposed budget will reduce the spread of digital connectivity. He welcomed the three-year tax exemption and extension to the ICT sector to a mixed response after the budget. Commenting that this opportunity should have been long-term, he commented negatively on the exclusion of NTTN from this list.

Syed Almas Kabir feels that the new sub-sectors that have been added such as: artificial intelligence, blockchain, robotics, SaaS, data science, are industry-friendly. Because we have to encourage new technology, there is no doubt about it. But at the same time, dropping NTTN will discourage us. The cost of the infrastructure we are building will go up. As infrastructure costs rise, our Internet and data connectivity will become less widespread than before.

Similarly, IT process outsourcing, medical transcription, search engine optimization – we export a large number of services in these sectors. Without tax exemption on these, costs will increase, resulting in loss of competitiveness in export markets and decrease in our exports. It will be difficult to achieve our $5 billion target, he added.

He also said, I don't understand why the tax exemption on web hosting and cloud services has been excluded. With these we want to promote data center business in our country. If these are not tax exempted, the cost of hosting and data centers in the country will increase. In this, organizations will consider hosting abroad. The data localization and proliferation of data centers we seek will be hindered.

Besides, if there is no tax exemption on system integration, foreign companies like India, Sri Lanka, Vietnam will come and do these works in our country. If we want to outsource system integration to local companies and keep them competitive with foreign companies, system integration must be included in the tax exemption.

Supplementary duty on internet services has been increased. Currently, 15 percent VAT is levied on internet services. It has been further increased by 5 percent to 20 percent. Which will affect the digital connectivity for sure.