In a major relief, information technology hardware industry has decided to pass on the 4 per cent across-the-board excise duty cut to consumers which will help bring down the prices of IT products like TFT monitors, printers and projectors and computers and notebooks.
"Four per cent, across-the-board reduction in CENVAT rate (excise duty/Central value added tax) will help bring down the prices of IT products. With this, desktops and notebooks will attract 8 per cent excise duty while all other hardware equipment would attract 10 per cent," MAIT executive director Vinnie Mehta said in a statement in New Delhi.
PC makers however, may take time to gauge the benefit of the duty cut as they have been adversely impacted by the rupee depreciation. Computers attract a 12 per cent excise duty rate, while for inputs, it varies between 0-14 per cent.
Individual companies did not respond to the impact of the duty cut. On Sunday, as part of its measures to stimulate the economy, the government announced an across-the-board 4 percentage point cut in the ad valorem Cenvat rate to be effective for the rest part of the current financial year on all products other than petroleum.
A leading notebook importer said there may be reduction of prices on fully-imported products including notebooks, its impact on prices of manufactured items such as desktop computers would depend on the synchronised effect of the cut, across the manufacturing value chain.
MAIT also asked the government for simultaneous rationalisation of duty on software used for hardware.
"Along with drop in excise duty for IT hardware, it is essential that the government rationalizes the duty on software which currently attracts 12 per cent service tax, failing which there would be Cenvat overflow in case of local computer manufacturing," he said.