Manufacturers’ Association of Information Technology (MAIT) has suggested Budget 2017 recommendations to India’s finance minister Arun Jaitley to enhance India as an attractive investment and manufacturing destination.
Extension of duty benefits to all ITA goods, including PCs and servers
Extension of concessional Excise and Customs Duty benefits to all ITA goods is crucial to achieve the vision of Make in India for IT hardware as well as to achieve the goals of Digital India; extending such benefits merely to a few products such as mobile phones and Tablets would defeat the purpose of the government’s initiatives. Extending concessional duty benefits to locally manufactured IT-Electronics equipment will help in attracting investment, increase employment opportunities and likely trigger innovations in design and manufacturing to address local needs.
It is important that the concessional indirect tax structure is continued under the new GST regime, to allow investments in local manufacturing to bear fruit.
List of CPE Goods for inclusion under the Duty Differential Scheme
The list of Customer Premise Equipment (CPE) goods needs to be updated and made comprehensive so as to ensure that the benefits reach all stakeholders. Networking Switches, Wired and Wireless Access Points, USB Adapters and Wireless Access Controllers are the goods that must be included under the excise duty concession scheme, or preferential rate of GST at 12 percent, post April 2017.
Harmonisation of IT Product Lists across Central and State indirect tax jurisdictions
Harmonisation of IT Product Lists across central and state indirect tax jurisdictions is necessary to ensure that industry players are able to claim benefits on IT goods that are rightfully theirs and avoid unnecessary litigation. A detailed list issued by the Central Government can be used as a reference guide by states to re-tune/re-determine their lists of products covered under the IT goods list, under the relevant VAT laws.
It would be necessary that directions are issued to state governments to ensure that a Uniform List of IT Goods is maintained under the merit rate category.
Establishment of Convergence Cell to provide impetus for the ICT Sector
A Convergence Cell needs to be established whose role would be to classify new IT products within 30 days of representation by industry. This measure will help to reduce delays, confusion as well as tax litigations arising out of classification issues.
Anwar Shirpurwala, executive director of MAIT said: “There is a need to develop a robust ecosystem to reduce the overall cost of production so that local IT manufacturers can compete at the global level. The existing capabilities of IT manufacturers have so far remained underutilised due to adverse tax policies and absence of quality infrastructure.”