BENGALURU - The union budget for 2016-17 is a mixed bag for the Indian IT industry and start-ups, as its proposals were less than expected, the industry's apex body NASSCOM said Feb. 29, shortly after Union Finance Minister Arun Jaitley introduced the plan in New Delhi.

"The budget is a mixed for the technology and services sector, as clarification and simplification boost business and more technology adoption in governance, is a step in right direction," the National Association of Software and Services Companies said in a statement.

On the Start-up India action plan the government unveiled in mid-January, it said caveats could be a “dampener” and more needed to be done to promote the nascent sector.

"In the backdrop of global economic volatility, there are unmet expectations on policy announcements that enable ease of doing business for our sector. The budget partially covers our wish list on policy bottlenecks, including ease of business, nurturing start-ups, products and e-commerce sector," NASSCOM chairman B.V.R. Mohan Reddy said in the statement.

Terming the extension of section 10AA for special economic zones units till 2020 a positive outcome, he also cautioned that the imposition of a minimum alternative tax on startups would not allow the full impact of benefits to be realized.

On Jaitley's stress on leveraging technology to transform India, NASSCOM president R. Chandrashekhar said the initiatives in the budget would help to implement the Digital India program and provide effective citizen services.

"The government should build a public-private partnership model for technology adoption across small and medium businesses, land record modernization, Aadhar adoption and procurement platforms. We will address procedural issues that impact the sector," he said.

NASSCOM, however, said it regretted that the budget did not address its plea on removal of dual levies on software products; domestic investors facing higher tax rates due to angel taxation and higher long-term capital gains tax and transfer pricing issues related to safe harbor margins.

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