TAIT condemns Govt notification on concessional excise duty

Mumbai based Trade Association of Information Technology (TAIT) has strongly condemned the new notification from the Tax research unit of the Revenue Department regarding the concessional excise duty. The association has said that the said notification has overlooked the interest of the Indian IT channel business ecosystem and it would benefit only the MNCs.

The government in its recent notification has restricted the concessional excise duty (CVD) of 6% on storage components only to ‘actual users’ for the manufacture of computer. The notification from the Tax research unit of the Revenue Department states, “The concessional excise duty (and hence, CVD) of 6% on Hard disk, CD ROM drive, DVD drive or writer, Combo drive, flash memory, microprocessors has been restricted only to actual users for the manufacture of computer (PCs/desktops).”

According to TAIT, other than the manufacture of Computer (PCs/desktops) all others in the IT ecosystems will have to shell out more 6.5% on their purchase of the components as duty structure is 12.5%. Due to this, other than the manufacture of Computers and desktops, all other player cost will increase by 2.5% -3% net considering these components constitute 35%-40% of the PC. TAIT said that this will create a non playing field and possibly malpractice in the entire system and it would also increase the price of the computer components making the PC assembling costlier.

“We feel that the Government of India’s understanding for continuing the tax structure benefits for the manufacturers of computers is not inclusive. We feel that as this will affect the channel community across the nation”, said K R Chaube, president of TAIT.

“We are reviewing its effect at large and the process of collecting the factual data for the appropriate representation with the concerned Government Officials is going on”, Chaube said.

TAIT has appealed FAIITA, a newly formed national federation of IT associations of India to put forward its representation regarding the notification in front of the Government of India.