The Hindu Business Line : IT industry divided over impact of excise duty

The Indian hardware industry today appeared sharply divided over the impact of 12 per cent excise duty on computers, with players such as Zenith, Acer and HP predicting about five per cent increase in prices of PCs and notebooks, even as HCL and hardware association MAIT maintained that the prices would remain stable.

Despite the Finance Minister's, statement that the 12 per cent excise duty would be eligible for full input tax credit and thereby not impact prices, companies like HP said the prices of desktops would increase by 3-5 per cent, while the notebook prices would rise by five per cent.

"The current CVD on components is lower than the excise duty that has been imposed on the finished product and, therefore, the vendors will have no option but to pass it on to consumers. HP is proposing to increase prices from tomorrow," Mr Ravi Swaminathan, Vice-President, Personal Systems Group, HP India, said.

The lone voices of dissent to this opinion came from hardware association MAIT, and HCL. "There will be no adverse impact on the PC prices, and the prices will remain unchanged. However, we are yet to ascertain the impact of the new packaged software levy on the PC prices," Mr Ajai Chowdhry, Chairman and CEO, HCL Infosystems Ltd, said

MAIT welcomed the Budget announcements saying that it has addressed the problem of inverted tariff structure.

Software prices to go up

However, what is amply clear is that the imposition of excise duty of 8 per cent on packaged software would lead to an increase in prices of software sold by companies like Microsoft and Tally, amongst others.

BPOs in service tax net

The Nasscom President, Mr Kiran Karnik, said the excise duties on computers and software had come at a time when the domestic market was set to take off in a big way. The Budget has also withdrawn the service tax exemptions for taxable services provided by a call centre or a medical transcription centre. "This means that the domestic work that the call centres do will be subject to service tax. ," Mr Karnik said.

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