Fringe tax hits technology stocks hard

DALAL STREET SPIKES

Technology stocks were among the biggest losers, dragging the Sensex down on Tuesday. The BSE-IT index declined 69.33 points, or 2.57 per cent, on the back of selling pressure in most frontline IT stocks, to end at 2,629.94.

Analysts said that the 30 per cent fringe benefit tax, a tax on value of perquisites or fringe benefits provided by an employer to his employees, will hit the IT companies hard that shell out freebies to its employees as perks.

Among the big losers were Satyam Computer, down 4.10 per cent to Rs 394.50, Wipro, down 3.33 per cent to Rs 675.85, Infosys Tech, down 2.48 per cent to Rs 2,181.55, and TCS, down 1.82 per cent to Rs 1,355.80.

A senior vice-president with a domestic broking firm said, "There are no major Budget concerns but few concerns in certain sectors such as oil and gas exist. The fringe tax may play spoilsport in the near-term."

"Technology companies suffered on Tuesday due to this but in the long term, this will not be a major issue."