For, in the wake of Finance Minister P Chidambaram’s budget proposal to hike excise duty on packaged software, both your software, as also hardware buys, could become wee bit pricey in coming days.

Once retail players in the  market get clarity on budget proposal, and rework their retail prices, your IT budget could go up. To recall, Mr Chidambaram, on Friday, presenting the budget proposed to increase excise duty on packaged software from eight per cent to 12 per cent bringing it on par with customised software which will attract service tax of 12 per cent.

Currently all packaged software attract import duty of eight per cent. The finance minister’s proposal is applicable on packaged software produced in the country. But it is almost certain that to bring in parity duty on imported software will also be raised to 12 per cent.

According to few retailers Deccan Herald enquired with Microsoft Vista with Microsoft Office 2007 is priced between Rs 3,600 plus for home users and Rs 6,000 to Rs 7,900 for business segment. Likewise, anti-virus software McAfee is retailed anywhere between Rs 900 to Rs 1,700 and Adobe Reader priced upwards of Rs 500.

Healthy margin

According to them it is for individual software companies to take a call on whether they would raise the price or pass it on to customers. Since software companies enjoy healthy margins on their products, they absorb higher duty themselves.

One vendor opined that price of PCs and laptops could go up if software prices are revised upwards with the result IT buying could pinch on one’s pockets. A clear picture though is expected to emerge after Tuesday when the companies would have had time to read the fine print of the proposal and finally take a decision, sources said.

Meanwhile, Microsoft India Chairman Ravi Venkatesan observed that the twin proposals will certainly lead to increase in cost of software for users. “We feel this will have an adverse impact on IT penetration as end-customers — in particular small businesses, home users, government, academic institutions and NGOs — will be unable to avail of input tax credit,” he said.