Budget 2012: Staying wired will byte your walllet

Personal computing gadgets and accessories, including desktops, laptops, tablets, printers, UPS and mobile phones, will cost more thanks to a hike in excise duty from 10% to 12%.
S Rajendran, chief marketing officer of Acer India, said if you were planning to buy a Rs 25,000 PC, the price would be higher by Rs 500. “The prices of all our PC products will rise by 2% because of the excise duty increase.For imported products, the countervailing duty will rise by 2 percentage points, so the prices of even those will increase by the same extent,” he added.
Sabyasachi Patra, executive director at the Manufacturer’s Association of Information Technology, said the prices of services provided by hardware providers, such as maintenance, would also now increase because of the service tax increase from 10% to 12%.
Over the last one year, PC demand has slowed down significantly because of rising prices on account of the rupee depreciation and shortage of hard disk imports resulting from the Thailand floods. A majority of the IT hardware products in India have a large proportion of imported components. The higher taxes now are expected to further dampen demand.
Vinay Deshpande, CEO of Encore Software, maker of products like Simputer, said the removal of customs duty on LCD panels would have a marginally positive impact, but that would be largely negated by the higher excise duty and service tax.
Patra said the service tax increase could also increase the prices of personal software products.
For India’s much vaunted IT services industry, the absence of any new tax saving announcements means that the smaller companies among them will likely suffer a setback. The 10-year tax holiday scheme has expired, and the imposition of the 18.5% minimum alternate tax (MAT) on SEZs has increased the tax incidence on the entire sector, industry body Nasscom said. Smaller companies would be particularly impacted because they would find rentals in SEZs, which offer tax advantages, too prohibitive.
However, the allocation of Rs 14,000 crore to the UID-Aaadhar project would mean fresh contracts for IT firms. The introduction of the advance pricing agreements, which sets the transfer price of the covered transactions prospectively between the taxpayer and tax authorities, will aid in the reduction of a huge amount of litigation.
Budget 2012
Budget News 2012