Mumbai
DNA
MAIT members have unanimously and repeatedly emphasised that a long-term, holistic fiscal policy framework is needed to encourage deepening of manufacturing and to give a much needed fillip to the IT hardware industry in India.
Continuation of the existing 8% excise duty/CVD on all IT products, across the value-chain, should be seen in this light. Further, providing appropriate incentives for IT manufacturers -- finished products and components in India, as in the case of semiconductors, would have a positive impact on IT manufacturing investments.
While technology -- computers and broadband combined, is today considered a strategic differentiator for any economy, it is essential to roll out mission-mode IT projects in sectors such as education, SMEs, households, e-governance, telemedicine and for rural India. These will go a long way in contributing to our national goal of inclusive development.
Coming to specific proposals we have been for long demanding that the 8% excise duty/CVD be continued on all IT products including computers, peripherals and components apart from a seamless CENVAT levy on IT manufacturing. This is needed to ensure that at no stage the excise duty or CVD is lower on finished products than components.
Another major issue that is leading to much confusion is the lack of alignment between the rate of service tax and excise duty/CVD. There is a structural anomaly as service tax is pegged at 10% while excise/CVD is 8%.
Another major confusion is on the levy of tax on software in the country. Packaged software attracts excise duty/CVD today. However, it is not charged on customised software or media or on the licensed software. Further it is subject to service tax when software is downloaded from the Internet. This apart, various state governments levy a VAT on software. Thus there is no clarity on the exact taxes to be levied on software and each levy has been used by authorities interchangeably.
The writer is executive director, MAIT
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