It was a mixed bag for the Indian IT companies this Budget. While the Fringe Benefit Tax was done away with for firms, the increase in minimum alternative tax (MAT) dealt a blow. 

In simple term, Finance Minister Pranab Mukherjee has given from one hand and taken away from the other.

Tax holidays under software technology park is extended by a year, but MAT is up by 5 per cent effectively. It all adds up to about 17 per cent tax rate for IT companies including surcharge and other levies.

"We wanted more from the Finance Minister. There are short term pains but with the offset extended to 10 years, it is fair," said Suresh Senapaty, CFO of Wipro.

While large caps like Wipro can afford to call MAT fair, the mid caps have taken the real hit.  

"Large firms typically have a lot of cash so therefore it doesn’t make much difference for them if MAT went up by 10 per cent to 15 per cent, but for smaller firms who don't have such large cash reserves, for them to pay extra 5 per cent MAT, would cause setback for them,” said Rostow Ravanan, CFO of Mindtree. 

Experts, however, believe that the IT sector will have to learn to live with a higher tax regime. 

If you are invested in tech pack, analysts say your earnings per share is still intact because MAT is unlikely to impact the profit and loss accounts of the companies, but more cash outflow will definitely curb the expansion plans of these companies.