The Hindu Business Line : Consumer electronics industry seeks tax parity with IT

With digital convergence rapidly mitigating the fine line between IT and consumer electronics products, the domestic consumer electronics industry has asked the Government to treat consumer electronics products at par with IT products for the purpose of taxation.

In its pre-Budget memorandum, the Consumer Electronics and Television Manufacturers Association (CETMA) said that with the advent of digitalisation, there is clear convergence of applications and technologies. Whether a cellphone, a PC, a set-top box or an MP3 player, the applications are overlapping and can be implemented in one or the other device. The LCD Monitor could easily be converted into television by adding a tuner and audio-video card. In other words, the difference between IT and non-IT products is getting blurred, as one can view TV programmes on the personal computer and the mobile phone. The association has requested that indirect taxes for consumer electronic products should be the same as for IT products.

CETMA has also asked for correction of inverted duty arising out of Free Trade Agreements (FTA) as major consumer electronic products have been included in the Early Harvest Scheme of the Thailand FTA. These products include colour TV, colour picture tubes (CPT), air conditioners and refrigerators. Customs duty on products imported from Thailand has become zero from September 1, 2006, thus resulting in incidence of inverted duty.

With the customs duty becoming zero per cent, there has been a jump in the volumes of import of these products from Thailand. For instance, the import of CTVs from Thailand was valued at $ 0.6 million before the FTA. It increased to $ 83 million in the financial year 2005-06.

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