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News >> Technology >>
IT industry divided over impact of excise duty
By agencies
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Wednesday, 01 March 2006, 20:30 IST
NEW DELHI: The Indian hardware industry appeared sharply divided over the impact of 12 percent excise duty on computers, with players such as Zenith, Acer and HP predicting about five percent increase in prices of PCs and notebooks, even as HCL and hardware association MAIT maintained that the prices would remain stable.
Despite the Finance Minister, P Chidambrams statement that the 12 percent excise duty would be eligible for full input tax credit and thereby not impact prices, companies like HP said the prices of desktops would increase by three to five percent, while the notebook prices would rise by five percent.
The HP India, Personal Systems Group, Vice-President, Ravi Swaminathan said, The current CVD on components is lower than the excise duty that has been imposed on the finished product and, therefore, the vendors will have no option but to pass it on to consumers. HP is proposing to increase prices from tomorrow.
The lone voices of dissent to this opinion came from hardware association MAIT, and HCL. There will be no adverse impact on the PC prices, and the prices will remain unchanged. However, we are yet to ascertain the impact of the new packaged software levy on the PC prices, says Ajai Chowdhry, Chairman and Chief Executive Officer, HCL Infosystems Ltd. MAIT welcomed the Budget announcements saying that it has addressed the problem of inverted tariff structure.
However on software front, what is amply clear is that the imposition of excise duty of 8 percent on packaged software would lead to an increase in prices of software sold by companies like Microsoft and Tally, amongst others.
The industry body, Nasscoms President, Kiran Karnik, said the excise duties on computers and software had come at a time when the domestic market was set to take off in a big way. The Budget has also withdrawn the service tax exemptions for taxable services provided by a call center or a medical transcription center. This means that the domestic work that the call centers do will be subject to service tax, he added.