How Union Budget 2021 may help IT companies in India

Gadgets Now Bureau01 Feb, 2021, 08:35PM IST

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The Union Budget 2021 didn't offer much to one of the country's biggest services export contributors -- Indian IT companies. Finance Minister Nirmala Sitharaman didn't announce any sops to boost the IT-BPM industry. However, there are some announcements in the budget that can boost the country's technology sector.

Rs 1,500 crore-scheme to boost e-payments

The government has proposed a Rs 1,500 crore-scheme to promote digital transactions in the country, a move that the industry believes will drive adoption of e-payments in smaller cities and spur innovation by fintech firms. Delivering her Budget speech, FM said that there has been a manifold increase in digital payments in the recent past. "To give a further boost to digital transactions, I earmark Rs 1,500 crore for a proposed scheme that will provide financial incentive to promote digital mode of payment," she said.

Digital census to boost IT services companies

The finance minister announced that the country will see first-ever Digital Census 2021. The proposal will boost software companies that run and build the technology-enabled backend.

Revamp of ministry of corporate affairs portal

The FM also proposed revamp of Ministry of Corporate Affairs portal MCA 21 3.0. The government will use data analytics, Artificial Intelligence, Machine Learning to launch MCA 21 3.0 which will add the facility of e-scrutiny, e-consultation, compliance management, and e-adjudication among others. The project is currently run by Infosys and is expected to come up for renewal in July 2021. It was given to Infosys in 2013, earlier TCS was handling the project. The second phase of MCA 21 had a total project outlay of Rs 357.81 crore. With new digital capabilities to be added, the next version of the project may garner more interest from foreign as well as Indian IT companies.

Digital census to boost hardware companies

The first ever digital census will mean a boost in business for hardware companies. As it will likely see a surge in sales of laptops, tablets, smartphones and printers.

Tax holiday extended for startups

Finance minister Sitharaman has extended by one more year the tax holiday for startups, providing boost to the upstarts. According to Union Budget 2021-22, startups will get capital gains exemption by one more year to 31 March 2022. Startups also have one more year to claim tax holiday.

To incentivise incorporation of one-person companies

The government also proposed to incentivise incorporation of one-person companies, the move will benefit startups and innovators. This move will allow such firms "to grow without restriction on paid-up capital and turnover, allowing conversion into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India,” Sitharaman said in her budget speech.

Government to give Rs 3000 crore for realignment of National Apprenticeship Training Scheme (NATS)

Government will provide Rs 3000 crore for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in engineering. This may help boost quality of talent for Indian technology companies.