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MAIT Seeks Clarity on GST Rates for IT Accessories

MAIT, the apex body representing India’s IT hardware, training and R&D service sectors recently expressed its concerns and requested clarity for tax slabs under GST regime with Finance Ministry especially for rates levied to printers, monitors and data cables under the new regime.

With technology being predictor of successful implementation of GST, MAIT approached the Finance Ministry with following apprehensions and sought clarity with respect to GST rates:

1. Ambiguity in the classification of printers

There is an persistent  ambiguity with respect to the rate of GST on printers.  The entry for printers as provided in the document as released by the Government is provided below:

 

Entry in the GST rate document releasedRate
HSN 8443 – Printing machinery used for printing by means of plates, cylinders and other printing components of heading 84.42; other printers, copying machines and facsimile machines, whether or not combined; parts and accessories thereof18%
HSN 8443 – Printer, photo copying, fax machines, ink cartridges28%

In this regard, it is relevant to note that the following VAT rate is applicable on printers presently:

 

StatesVAT Rate
Karnataka, Rajasthan and Jharkhand5.5%
Gujarat and Uttar Pradesh4% + 1% additional tax
Maharashtra, Bihar and Assam6%
Delhi, Tamil Nadu, West Bengal, Kerala, Telangana, Madhya Pradesh, Andhra Pradesh and Orissa5%

 Hence, from the above it is clear that the States listed above levy VAT at a lower rate on printers.

 Further, it is relevant to note that the excise duty applicable on printers is 12.5 percent.  Given that a fitment exercise has been undertaken by the Government to arrive at the rate of GST applicable on various products, the fitment rate on printers  is at a maximum of 18.5 percent (i.e., excise duty of 12.5 percent and VAT of 6 percent).  Accordingly, the rate of GST on printers should be around 18 percent.

 Therefore, basis the above it is recommended that the entry of printers which is subject to 28 percent should be omitted which will ensure that printers are subject to tax at the rate of 18 percent which is closer to the rate printers is taxed today.

2.Rate of GST on monitors and projectors

GST rate schedule provides that, “Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receiver or sound or video recording or reproducing apparatus shall be subject to a GST rate of 28 percent.

Monitors are principally used along with automatic data processing machines, ie, personal computers which would be subject to GST at the rate of 18 percent.  Further, it is relevant to note that presently, monitors are liable to excise duty of 12.5 percent and lower rate of VAT, ie, of about 5 to 6 percent.  The VAT rates applicable in various States is provided in the table below:

 

StatesVAT Rate
Karnataka, Rajasthan and Jharkhand5.5%
Gujarat and Uttar Pradesh4% + 1% additional tax
Maharashtra, Bihar and Assam6%
Delhi, Tamil Nadu, West Bengal, Kerala, Telangana, Madhya Pradesh, Andhra Pradesh and Orissa5%

Given that a fitment exercise has been undertaken by the Government to arrive at the rate of GST applicable on various products, the fitment rate on monitor at a maximum of 18.5 percent (i.e., excise duty of 12.5 percent and VAT of 6 percent).  Accordingly, the rate of GST on printers should be around 18 percent. Therefore, it is recommended that monitors be subject to GST at the rate of 18 percent, failing which it would impact the industry adversely.

3.Uniformity in the rates of IT products

Given that IT plays an important role in various aspects on an everyday basis, it is recommended that the list of IT goods as provided in the Information Technology Agreement as agreed by the World Trade Organization to which India is a signatory be subject to GST at the rate of 18 percent.  This will also ensure that the aim of the Government of Digital India is achieved as GST at the rate of 28 percent will make IT products expensive to the end customer.

Rate of GST on other IT accessories as LAN / Data cable: These products were on 12.5% CVD and 5% VAT.In GST proposed tariff other IT accessories as LAN / Data cable is showing as 28%. This form integral part of all digital installation hence should be considered part of IT and should be at 18% slab.

Commenting on the anomalies in GST regime, Nitin Kunkolienker, President of MAIT expressed serious concerns and said, “The Finance Ministry immediately needs to clarify anomaly in tax slabs in printers, projector and printers. All of these items along with IT accessories as Data cable  collectively form important part of “Digital India” and they should be taxed at 18% to make Digital India successful.”

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