Taxation of IT Companies

It is high time, the IT companies are brought under the Tax net.  For far too long, the IT companies have been enjoying the benefit, while other companies in the manufacturing and other sectors are paying hefty taxes. Given the present day scenario, I feel everybody should be treated on an even keel.  One indirect beneficiary of the tax exemption is Satyam.  As per the voluntary disclosure made by Mr. Ramalinga Raju, it seems that Satyam's profit was being inflated artificially for years together along with non-existent cash balances.  Had some amount of tax levied on the IT firms, it would not have been possible for Mr. Raju to inflate the revenues artificially, as he would have had to cough up money for the payment of the taxes and coupled with the fact that there was no money in their kitty, he would have been forced to a corner in the first place.  Such a situation could have been avoided.

However, we don't know.  Looking at the sheer audacity of Mr. Ramalinga Raju, it is definite that he would have devised another plan to defraud the investors.  Taking into consideration the number of IT firms around in this country, it sends a chill up my spine to imagine how many such similar cases are there.  It is high time, the Government along with the ICAI bring about a systemic change to prevent such incidents occuring in future.

One more thing which is pestering me for quite some time is how come on the one hand Merril lynch came to know about the financial irregularities immediately on it being appointed as investment bankers to enhance shareholders value, while on the other hand PriceWaterhouseCooper could not detect the irregularities for years together.  There is something fishy about the same.

Regarding the bail-out of Satyam, quite a few voices have come out against it.  Just because it is Satyam, the corporate sector wants a bail out.  What about the numerous companies which have become sick due to genuine problems. What happened to their employees.  No body bothers.  Just because an iconic company has fallen, it does not mean that tax payer's money should be used to bail the company out.  It would definitely send a wrong signal to all the wrongdoers.   By letting the company fall and taking stringent action against the perpetuators who commit such frauds, the world at large would definitely appreciate India