Direct Tax: Need for Introduction of Technological Upgradation Allowance in the upcoming Budget 2013-14
February, 26th 2013
Need for Introduction of Technological Up-gradation Allowance in the upcoming Budget 2013-14 The total income of a company is computed in the manner in which the income of any individual is computed. The first and foremost step in this direction is to ascertain the gross total income.
Income is computed under four heads i.e., income from house property, profits and gains from business or profession, capital gains, and income from other sources is aggregated. From the gross total income that is computed, various deductions are allowed under the Income Tax Act, 1961.
In the era of fast changing technology, corporates have to upgrade their technologies to minimize their manufacturing cost with a view to achieving competitive edge, which is absolutely necessary for the survival.
Need for giving a much-needed boost to jack up investment in the sagging manufacturing sector. Sectors such as drugs and biotechnology, identified as having strong potential for growth and other strategic sectors like capital goods, engineering, electronics etc require huge amount of money for research and development. Therefore there is an acute need for introduction of allowance for technology upgradation.
Department of Information Technology (DIT) is responsible for formulation, implementation and review of national policies for promotion of usage of Electronics and Information Technology in the country.
The vision and mission for IT sector should be e-Development of India through a multi-pronged strategy of e-Infrastructure creation to facilitate and fast-track e-Governance, Promotion of Electronics Hardware Manufacturing and Information Technology-Information Technology enabled Services (IT-ITeS) industry, providing support for creation of innovation/ research & development (R&D), building knowledge network and securing India's cyber space.
In this perspective, technological upgradation allowance should also be introduced whereby a Company is permitted to set apart a certain percentage, say, 5-7 percent of their profits, by way of deduction in the computation of taxable profits, to be exclusively used for upgrading their