When Budget 2011-12 is presented on Monday, Saravanan Velrajan will be keeping its fingers crossed. The big expectation of this young product manager at an IT firm will be the same as that of his industry’s: extension of the decade-old Software Technology Parks of India (STPI) scheme, which is otherwise set to expire this year.
The STPI offers tax exemptions to firms located in IT parks. “This is a huge concern for a US-based networking and routers company like mine,” says Velrajan, 33. “For, we import software and equipment from US a great deal for which we are given concessions under this scheme. The first thing I am looking forward to in this budget is whether it will be extended.” Withdrawal of the scheme will directly increase the costs incurred by the company and could affect employee pay hikes.”
He and his teacher-wife Divya also hope for the implementation of the rumour about extension of the annual income tax exemption limit to `2 lakh. “Income levels within the IT industry,” says Velrajan, “haven’t gone up in proportion to the inflation. Saving has anyway been affected greatly. Increasing the tax exemption slab will be a good change.”
His family’s annual income amounts to nearly `30 lakh, and he manages to save nearly 50 per cent of it, and invests mostly in land. “Four years ago, I could save 25 per cent more in the income I earned then,” he rues. “Even if STPI is scrapped, I hope other concessions are shown for the IT industry,” says Velrajan, who has a four-year-old daughter.
The next best thing to look forward to would be changes in taxing employees for their perks. “Even our stock options are now taxable, and that is a huge chunk if you are in a senior position in the company. I hope we exempt ESOPs from this,” Saravanan explains. This tax has reduced perks the IT-sector employees enjoyed — like company-paid holidays, gift vouchers or gift coupons, he rues.
On the home front, the couple is looking for a budget that will make food cheaper. “We stress on a healthy diet at home,” says his wife Divya. The biggest concern now is the extra spending on grocery. Fruit and vegetable prices have doubled in the past year. Let’s see if the budget will have clauses that are consumer-friendly.”