MAIT for tax sops, policy push to prop up IT hardware sector

Describing the Centre’s policy stance towards the IT hardware sector as ''anti-manufacturing'', since some of the levies imposed make it more cheap and viable to import traded products than to manufacture IT products locally,'' the Manufacturers’ Association of Information Technology (MAIT), has called for slew of tax sops and policy initiatives to provide proper fillip to the sector.

The association, in its 2012-13 budget wishlist, likewise, in order to ensure high IT adoption in the country, has suggested allowing 100 per cent foreign direct investment in single brand store.

It has also called for providing concessional rate of interest for procurement of PCs, subsidy for broadband access charges in rural areas, besides solar power back-up to panchayats so that access to installed PC and internet is not affected and mobile phone can be charged.

Seeking clarity on classification of software as services or as product, it has called for abolition of 4 per cent special additional duty on all IT products/ATM/components.

According to MAIT, as percentage of value addition of IT hardware manufacturing industry in India was around 10 to 15 per cent, to utilise the additional cenvat of 4 per cent special additional duty, value addition should be around 44 per cent, which, is impossible for the IT industry to achieve.

Suggesting adoption of a globally competitive tax regime, the association has called for zero duty on all inputs for manufacture of electronic components and parts including dual use inputs in order to avoid inverted duty. 

Besides withdrawal of MRP (minimum retail price) based assessment of IT products, MAIT has also sought several excise duty, customs, service tax exemptions. It has  exhorted the need for expeditious implementation of GST regime with preferred status for IT products. Should there be delay in the implementation of GST, the association wants zero CST on electronics value chain till such time.

Urging the government to notify all IT products as declared goods in line with the World Trade Organisation agreement, MAIT has impressed upon the Centre to levy uniform VAT rate on IT products across the country and remove MAT (minium alternate tax) on SEZ and SEZ units as it is against the policy.

Stressing the need to allow import of second hand capital goods such as servers and storage products, MAIT said, they provide low cost automation to various educational institutions, universities, hospitals, banking and insurance.

The association, however, called for ban on import of second hand photocopier as they lead to huge revenue loss to the government due to subsequent sales and causing environmental problems turning into e-waste.