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Tag: customs duty

  • Customs duty imposed on telecom products not covered by Information Technology Act

    Customs duty imposed on telecom products not covered by Information Technology Act

    NEW DELHI: Basic customs duty at 10 per cent has been imposed on specified telecommunication products that are outside the purview of the Information Technology Agreement as part of an attempt to boost domestic production and reduce dependence on imports.

     

    The Telecom Equipment Manufacturing Association (TEMA)  is all smiles about this largesse from the finance minister. It states that it is likely to generate 500,000 jobs over the next three years.

     

    TEMA chairman emeritus N.K. Goyal gives his perspective: ” The Government signed ITA 1 on 25th March 1997 and committed import of duty free on 217 items. However, several items which were not covered under ITA 1, were also imported Duty Free. So, now this has been corrected by levy of import duty on non ITA-1 items. While ITA allowed import of finished product duty free, domestic manufacturers paid taxes on import of components used for making a complete unit which made indigenous production of electronic products expensive and wiped out almost entire hardware production in India. This budget gives a positive signal that while India will meet all its WTO commitments, it will also support domestic manufacturing. This will go in long way to promote indigenous manufacturing of telecom equipment.”

     

    Some of the telecom gear which will see an increase in production, TEMA, says are VoIP phones and some network equipment, which will be in high demand during the roll out of 4G services. It expects that the move will push industry production to around Rs 25,000 crore, while the requirement of 3G and 4G equipment is expected to be worth Rs 10,130 crore and 12,660 crore in 2015-16. On the whole it stated that the telcos will be pumping in close to Rs 5.21 lakh crore by 20120 to expand their networks.

     

    Noting that the demand for electronics is growing very fast, Finance Minister Arun Jaitley in his proposals for 2014-15 announced that all inputs/components used in the manufacture of personal computers would be exempted from four per cent special additional duty (SAD). Education cess has been imposed on imported electronic products to provide parity between domestically produced goods and imported goods.

     

    An exemption of four per cent SAD on PVC sheet and ribbon used for the manufacture of smart cards has also been proposed.

  • Budget 2008: IBF wants no customs duty on STBs

     

    NEW DELHI: The Indian Broadcasting Foundation, the largest body of television channels in the country, has urged the Finance Ministry to exempt CVD, cess charges and additional duty on set-top boxes (STBs) for the next 10 years.

     

    Digital cable TV would get a boost if STB prices fell, IBF said.

    In a pre-budget memorandum presented to the Revenue Secretary and other senior officials in the Ministry recently, the IBF has also demanded that the concessions given to the IT industry should be extended to broadcasting, particularly in view of the convergence of technologies.

    For example, as of now, customs duty, CVD, and cess for broadcast equipment put together is 36.64 per cent whereas it is only 21.32 per cent for computers and 4 per cent for cell phones.

    The Foundation says that it is the most heavily and unfairly taxed Industry.

    Apart from service tax, states impose very high, even up to 35 to 40 per cent entertainment tax as also sales tax, stamp duty etc.

    The base of the fringe benefit tax for the broadcasting industry has been kept at 20 per cent whereas the base for six industries including computer software industry is only 5 per cent.

    The IBF says that the total service tax at 12.36 per cent on the total television media advertising revenue of Rs 74 billion works out to Rs 9.15 billion. Of this, the service tax liability of Doordarshan is Rs 1.01 billion and that of other channels is Rs 8.14 billion.

    Of the total ad revenue, the share of Doordarshan is Rs 8.18 billion and private channels is Rs 65.82 billion.

    The customs duty should be zero to make STBs affordable to consumers and no excise duty to encourage indigenous production of STBs.

    The government should exempt the broadcasting industry from service tax as in the case of print media, the IBF says.

    The government had in March 2005 granted exemption to the service providers (small cable operators) whose aggregate value of taxable service for a financial year does not exceed Rs 400,000. There was need for a clarification that the exemption granted is only in respect of service tax payable on services provided and does not extend to service tax charged on services procured by cable operators. Cable operators, thus, are liable to pay service tax charged by broadcasters and multi-system operators (MSOs).

    In this regard, the service tax authorities may be asked to launch periodic campaigns to ensure that all last mile cable operators are registered and display their registration certificates prominently.

    In view of the fact that broadcasting is included in Entry No. 31 and is being treated as a “Service” under Entry No. 92 C of List I of Seventh Schedule of the Constitution, the state and union territory governments may be directed not to levy entertainment tax, sales tax, etc. on the broadcasting industry inclusive of distribution services.

    There was need to expand the definition of Industrial Undertaking under Section 72A of the Income Tax Act, 1961 to include Electronic Media, that is, TV Broadcasting.

    In order to enable cable operators invest in infrastructure for achieving time bound digitalisation, a “National Fund” may be created to provide soft loans etc.

    Television industry is the electronic version of the print media providing information, entertainment and education to the citizens of India. Though service tax is levied on Broadcasting media, print media is not attracting service tax even though it enjoys a larger share of advertising revenue.

    According to the IBF, The total estimated advertisement revenue for 2006-07 was Rs 164 billion of which 55 per cent was generated by the print media (Rs 90 billion) and 45 per cent by TV channels (Rs 74 billion).

    The Ad spend to GDP ratio for India is one of the lowest at 0.34 per cent. It is 1.3 per cent for USA, 1.0 per cent for Australia and even neighbouring countries in South East Asia like Malaysia, South Korea, Singapore etc enjoy a high ratio of 0.8 per cent to 1 per cent.

    Without government’s support like service tax holiday on advertisement revenue, the potential cannot be exploited to the desired extent. Service tax pulls down consumption and hence economic growth. Lower consumption means lower overall tax revenues.

    As a result of the service tax, even the public service broadcaster Prasar Bharati will have to increasingly depend on Government grants while private TV channels (particularly news channels) will have a hard fight to survive, the IBF points out.

    At the outset, the IBF points out that there are 122 million Television homes in India and more than 71 million homes are connected to Cable & Satellite TV and these are increasing rapidly.

    The industry produces approximately 6,00,000 hours of original programming annually for more than 300 TV Channels making it one of the biggest in the world.

    There are over 56 million viewers of Indian television programming in neighbouring countries and overseas, creating a positive international image of India unlike any other media.