India must reduce tax to increase computer penetration: study

Thursday, 27 November 2003, 08:00 Hrs
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NEW DELHI: The Indian government must lower the tax ceilings for the domestic hardware industry to increase computer penetration in a country of over one billion people, said a study report Thursday.

"India is known to have the highest tax rate in Asia Pacific on personal computers," said Sameer Kochhar, CEO of Skoch Consultancy, while releasing a report, "Accelerating IT Penetration in India to Remain Competitive."

"The tax rate on computers in India is at about 35 percent compared to zero percent in Malaysia and Hong Kong, three percent in Singapore, 15 percent in Pakistan and 17 percent in China," Kochhar told a press conference here.

According to the study, the high level of taxation in the domestic hardware industry has resulted in a flourishing grey market that accounts for a whopping 61 percent of total computer sales.

"The prices of personal computers have come down marginally in recent years due to competitive pressure but it is not sustainable as the bottom lines of companies are taking a hit," said Kochhar.

"Further price reduction would require help from the government in terms of reduction of excise duty from the prevailing level of 16 percent to eight percent and an enhancement of depreciation rate from 60 percent to 100 percent."

The study said the reduction in excise duty would result in 30 percent growth in computer sales and bring additional revenue to the government on the back of a sharp jump in volumes.

Source: IANS
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