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IT hardware industry wants relaxed taxation in budget

New Delhi, June 03, 2009

Indian IT hardware industry has called for parity in the countervailing duty (CVD) and service tax, levied on IT hardware products, in a pre-budget memorandum submitted to Finance Minister Pranab Mukherjee.

"It is strongly recommended that the rate of service tax be aligned to that of the excise duty/CVD to avoid structural anomalies," the Manufacturers' Association for Information Technology (MAIT) said in a statement Wednesday.

Currently, the Service tax is pegged at 10 percent while the rate of excise duty/CVD is 8 percent.

"MAIT members have unanimously and repeatedly emphasised that a long-term, holistic fiscal policy framework is needed to encourage deepening of manufacturing and to give a much needed fillip to the IT hardware industry in India," MAIT executive director Vinnie Mehta said in the statement.

"Continuation of the existing 8 percent excise duty/CVD on all IT products, across the value-chain, should, therefore, be seen in this light," Mehta added.

CVD is an additional duty apart from Customs Duty (CD) that is levied on imports and is equal to excise duty levied on a like product manufactured or produced in India.

The memorandum, which was submitted to the minister late Tuesday, also stated the need for a stable policy regime for the IT hardware industry and for growth-oriented measures to boost domestic IT consumption.

"The monetary and fiscal measures announced by the government in recent past have been able to instil confidence in the industry to an extent. With lower than expected consumption of IT products in the financial year 2008-09 owing to the economic slowdown, we now hope for a long-term growth-oriented policy," Mehta said.

MAIT also recommended abolishment of Special Additional Duty (SAD) of 4 percent on IT hardware exports and abatement of up to 35 percent on taxes levied on IT hardware products.

Currently 20 percent abatement is provided. 

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