IT industry seeks clarity on duty and taxes

NEW DELHI: As the country tries hard to attract manufacturing capabilities under its overall India advantage, the manufacturing industry is looking forward to getting a clear picture when it comes to implementation of issues like four percent Countervailing Duty (CVD) or Value Added Tax (VAT).

"The finance minister has done a good job while addressing the ICT sector. He has already announced that IT software will be exempted from CVT. But on the other hand he has not clarified fully on the CVD front," explained Moser Baer CMD Deepak Puri.

While presenting the Union Budget 2005-06 in the Parliament, Finance Minister P Chidambaram has proposed four percent CVD on imports for IT inputs. With an aim to cover the entire production and distribution chain, the minister has also proposed to implement VAT on a national scale starting from April 1, 2005. "It is still not clear whether the CVD is only for imports. According to the current situation, I am going to pay 12 percent extra on CVD. So these issues need a bit of clarity," Puri added.

Echoing similar mood, Motorola Asia Pacific Strategy and South Asia Group VP Amit Sharma said that the FM has taken a lot of interest in putting manufacturing sector on top of the priority list but still there are issues like the duty structure for infrastructure that are untouched.

"Chidambaram has addressed issues related to the manufacturing sector and I am quite positive about the kind of manpower generation that he is predicting. Certainly, local manufacturing will get a boost. Overall, the budget is really good and our finance minister has a commendable job, but, I would like to see more clarity on issues related to infrastructure duty," he added.