Thread: Tax benefits for the Electronics Industry

India is today one of the most favourite destinations for research, design and testing. Now, it is also emerging as the next biggest manufacturing hub in Asia, which will cater to the rest of the world. Though a bit delayed, the Semiconductor Policy is in place, which is like a shot in arm for the manufacturing sector.

The Indian government has taken several steps to encourage manufacturing in the country, though much is still needed to bring the nation on par with its global counterparts. One of the major benefits that a government can offer to the manufacturers is tax cuts. This article tries to explore the policies that India has in place for the electronics industry and the tax benefits for the players in electronics manufacturing space.



"The tax benefits are generally available on well-defined procedures and policies," says N.K. Goyal, president of Communications and Manufacturing Association of India (CMAI). The Department of Information Technology (DIT) is actively engaged in promotion of electronics hardware manufacturing in the country. It works in close coordination with various associations of the electronics hardware industry and thus, from time to time takes various measures to encourage the industry. In addition to offering various other benefits to the players, the government a1S(" ensures relief in duties.

"The government is taking steps to bring down the total taxation level on electronics hardware. In that direc¬tion, the general rate of excise duty (CENVAT) has beetueduced from 16 per cent to 14 -per cent in the Budget 2008-09 and central sales tax (CST) has been redw:ed,trom 3 per cent to 2 per cent. Excise duty on computers is' 12 per cent. Microprocessors, hard disk drives, floppy disk drives, CD ROM drives, DVD drivesjDVD writers, flash memories and combo drives have been exempted from excise duty. Parts, components and accessories of mobile handsets including cellular phones are exempted from excise duty. Valueadded tax (VAT) on IT products is 4 per cent," informs Jyotiraditya Scindia, union minister of state for IT and communications.