comscore Union Budget 2016-17: Arun Jaitely announces new tax rules to boost local telecom, IT production
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Union Budget 2016-17: Arun Jaitely announces new tax rules to boost local telecom, IT production

Finance Minister Arun Jaitely announced that tax on mobile chargers and phone motherboards will go up. Mobile phones will be expensive by 1 percent. He also announced 10 percent tax on income from worldwide exploitation of patents developed and registered in India was also announced.

  • Published: March 1, 2016 11:25 AM IST
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With focus on Make in India, the government yesterday announced steps, including tax on imported accessories such as mobile chargers and phone motherboards, which experts say will take IT hardware sector from assembling products to manufacturing with higher value addition. While presenting the Budget for 2016-17, Finance Minister Arun Jaitley said suitable changes are proposed to be made in customs and excise duty rates on certain inputs, raw materials, intermediaries and components and certain other goods. Also Read - WhatsApp violates Indian users' rights by denying dispute resolution claims Centre

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This will “reduce costs and improve competitiveness of domestic industry in sectors” like IT hardware, capital goods, defence production and textiles among others, he said. The Budget proposes to withdraw Basic Customs Duty (BCD) (10 percent) and Countervailing duties (CVD) (12.5 percent) exemptions on imports of chargers, adaptors, battery, wired headsets and speakers used in mobile phones. The Budget also waived basic custom duty and special additional duty (SAD) for machinery and equipment that will be used for making electronic chips or semiconductor in India.

Also, the minister announced 10 percent tax on income from worldwide exploitation of patents developed and registered in India.

“Government has imposed duty on products like chargers, battery used with mobile phones and waived duty on components used to make them. This makes strong case for making them in India. Those who will import them will need to pay 12.5 excise duty and domestic makers will have to pay 2 percent,” Indian Cellular Association National President Pankaj Mohindroo said.

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He said that around 29 percent tax will be levied on components that will be imported. With a view to move towards value added manufacturing of mobile phones and computers, the government announced special additional duty of 2 percent and 4 percent, respectively, on circuit boards used in manufacturing.

“This will make mobile handset expensive by 1 percent. We will request government to reconsider it,” Mohindroo said.

MAIT Senior Vice President Nitin Kunkolienker said the duty on PCBs for personal computers will have a minimal impact and it may encourage some players to buy these inputs locally. He also said that the change in duty structure will encourage manufacturing of consumer premise equipment like modems, routers, digital video recorder, STB for Internet, IP camera. “We expect investment of about Rs 10,000 crore for their local production.”

“I expect their prices will go down by 8 percent in first year and by 10 percent in one and half year,” he added.

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  • Published Date: March 1, 2016 11:25 AM IST



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