Skip to main content

High GST may hit Make-in-India electronics goal

High GST may hit Make-in-India electronics goal
Prime Minister Modi’s flagship Make In India plan could be hurt by the GST rates that have been set for electronics as some rates make it cheaper to import goods, industry players have said, possibly putting a damper on the government’s goal to achieve zero imports in electronics by 2020.
The Manufacturers’ Association for Information Technology (MAIT), the apex body representing India’s IT hardware sectors and certain manufacturers, expressed concern over tax slabs under  GST regime related to printers, monitors and data cables. Speaking to ET, Anwar Shirpurwala, Executive Director, MAIT said that although GST has reduced the number of taxes, the rates in some cases make it cheaper for importers than for smaller companies manufacturing in the country.
For example, the pre-assembled desktops are charged at 18% but standalone monitors that are mostly manufactured in the country are charged at 28%. “All IT products should be in one slab. Desktop computers are imported into India at zero percent and have been put at 18% GST and if you compare it with local company which manufactures a monitor or buys monitor and CPU locally to integrate and sell in India, there would be a clear difference of price. Government should look into this anomaly,” Shipurwala said.
He added that considering the importance of IT in government projects, it would be better if all IT goods, as described under the IT act, are subjected to a rate of 18% GST which would help local manufacturers build products and contribute to the cause of Digital India. “Make in India is a landmark initiative but it still needs concrete policies to lessen the burden of imports.”
Similarly, Chandrahas Panigrahi, Consumer business head of hardware and electronics organisation Acer said that though GST simplified taxation across states, putting all IT products in one rate slab would have helped the Indian hardware industry. Rahul Agarwal, CEO, Lenovo India said that a single tax slab would make fewer hassles for all organisations like them.
But analyst agencies like Aranca, IDC and KPMG that ET spoke to said that the overall impact of GST on hardcopy peripherals had been positive. Nishant Bansal, Associate Research Manager, at IDC India pointed out that accounting governance created by GST implementation, which requires businesses to maintain copies of electronic invoices to claim GST refund, largely contributed to the market growth in 2017 Q3.

The Economic Times, New Delhi, 24th November 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Firms with sales below Rs.50 crore out of ambit

The tax department has reiterated that the PoEM rules, which require foreign firms to pay taxes in India if the effective control is here, will not apply to companies withaturnover of Rs.50 crore or less inafinancial year. Last month, the tax department had come out with the longawaited Place of Effective Management (PoEM) rules, which require foreign companies in India and Indian firms with overseas subsidiaries to pay local taxes if their businesses are effectively controlled by Indians. Then the rules did not setathreshold above which they were to apply. However, the accompanying press release states that the rules will not apply to companies withaturnover of up to Rs.50 crore inayear. That created confusion whether the threshold will be adhered to. Inacircular to clarify things, the Central Board of Direct Taxes (CBDT) said the provision "shall not apply toacompany havingaturnover or gross receipts of ~50 crore or less inafinancial year".

PoEM rules essentially target shell …