Consumer electronics industry seeks tax parity with IT
September, 08th 2007
Bring rates down to ASEAN levels in phased manner
Consumer electronic manufacturers have sought parity in tax treatment with the information technology industry, stating that differential duties are incongruous in the present era of convergence. The Centre levies a 16 per cent excise duty on televisions, whereas it is 12 per cent for personal computers (PC). Similarly, televisions attract a 12.5 per cent value added tax (VAT) rate, while it is 4 per cent for PCs.
Treating consumer electronics differently from IT is an outmoded approach and does not fit in with the era of convergence, where a PC can serve as a TV and vice versa. You simply need to add a tuner to an LCD monitor PC for converting it into a TV, just as a DVD can be played on both an electronic player as well as a computer, said Mr Suresh Khanna, General Secretary, Consumer Electronics and Appliances Manufacturers Association (CEAMA).
According to Mr Khanna, there was also a misconceived notion that consumer electronic industry catered to the luxury segment, as opposed to IT which is being consciously promoted to reach out to the masses. The reality is that the domestic market for TVs, at over 11 million units annually, is almost twice the 6.3 million odd PCs sold during last fiscal 2007.
The Association also pointed out that the total taxes on televisions that amount to 30 per cent should be brought at par with the Association of South East Asian Nations level of 5-7 per cent. Total taxes on TVs in India are the highest in the world. These taxes should be brought down to ASEAN rates in a phased manner. In the first phase, rates should be slashed to under 20 per cent and eventually brought down to 5-7 per cent, said Mr Khanna. Such high levels of taxes compel people to buy at the grey markets, he added.
CEAM, that recently elected Mr Ravinder Zutshi as its President, has started working on a draft and expects to table these concerns before the budget next year. Consumer electronics are no longer luxury items. These have become a necessity today. Also not only does the sector provide revenues to the Government, it also provides several people with employment, said Mr Khanna. The total consumer electronics and home appliances industry is worth Rs 30,000 crore with appliances such as air conditioners and microwaves seeing a 30 per cent and 20 per cent growth respectively. In fact, the home appliances category is growing at 12-13 per cent annually.