7% import duty on computers

In a bid to provide a level playing field for domestic computer manufacturers, the government today announced the introduction of an additional duty of 7 per cent on import of finished computers.

But industry players said this would not alter the final prices of personal computers(PC), which would remain at their pre-Budget levels.

The domestic personal computer industry had complained after the Budget 204-05, that their interests had been hurt by the reduction in the excise duty to nil from 16 per cent on personal computers.

Instead of undoing the duty change, the government has imposed a 7 per cent duty rate for a full system including central processing unit (CPU)-box, monitor, keyboard and mouse and 6 per cent for a CPU-box.

This will result in bringing the price of imported finished computers at par with the price offered by indigenous manufacturers.

The countervailing duties have been left untouched at the previous rate of 16 per cent.

Industry experts said the move is in accordance with the government's commitment to bring a zero-duty regime for all types of personal computer products and inputs by March next year.

The government has also abolished customs duty on electromechanical parts like cabinets, key-switches and power supply equipment. At present, electromechanical parts are charged at a rate of 5 per cent whereas 10 per cent duty is levied on power supplies.

The Manufacturers' Association for Information Technology (MAIT) welcomed the resolution by the Finance Ministry.

Commenting on the PC prices, Vinnie Mehta, Executive Director, MAIT said, "There will be, practically, no change in the prices of the personal computers as they will continue to remain at the pre-budget levels."

The very marginal drop in prices due to reduction in customs duty on electromechanical parts and power supplies will be neutralised by the 2 per cent education cess, Mehta added.

In the general budget this year, the finance minister had abolished the excise duty on finished computers from the existing level of 8 per cent, while that on most input parts and peripherals was left at 16 per cent.

This measure had made the import of finished computers cheaper and came as a major set back for the indigenous manufacturers.

The measure had also confused the consumers as they were expecting a price cut due to the announcement. The industry was not in a position to do so, due to increased input costs as a resulted of the tax distortion.