Govt fixes additional duty on finished PC imports

NEW DELHI: The Union Government has announced the introduction of an Additional Duty under the Customs Tariff Act, Section 3(3), as a result of which, a duty equivalent to that paid on the input parts and peripherals by a local PC manufacturer, Indian or MNC, will now be levied on imports of finished computers. The rate is seven percent for a full system (CPU-box, Monitor, Keyboard and Mouse) and six percent for a CPU box. The excise/CVD on inputs would continue to remain at 16 percent.

Additionally, to prepare the industry to meet the challenge of the zero duty regime in March 2005, the Government has abolished the customs duty on electro-mechanical parts like cabinets, key-switches etc. from five percent and on from SMPS (power supply) from 10 percent to nil. This is to ensure that all inputs are also available at zero customs duty when the customs duty on finished products like PC, monitors and keyboards is completely phased out.

MAIT has welcomed the resolution of the impasse in the PC and peripherals manufacturing business, which had set in after the union Budget 2004-05. Elucidating on the impact of the measure on the PC prices MAIT executive director, Vinnie Mehta said, "There will be practically, no change in the prices of the PCs, they will continue to remain at the pre-budget levels. The very marginal drop in prices due to reduction in customs duty on electromechanical parts and SMPS will be neutralized by the two percent education cess.

However, it is very critical to develop the domestic market, and therefore we strongly recommend that the Government consider increasing the rate of depreciation on IT products from existing 60 percent to 100 percent. This will not only motivate the corporate and the SMEs to invest in IT, but also subsidize their IT purchase to the tune of 14 percent -15 percent, a much needed catalyst for a price sensitive market like India."