Resellers not excited by the CST cut

DQW Bureau
19 Feb 2004


There is not much excitement for the channel community in the

recently announced Tamil Nadu state budget for the financial year 2004-05. The

state government has presented a tax-free budget this week in the assembly

announcing concessions to the tune of Rs 140 crore.

On the IT fro-nt, the govern-ment has cutd-own the Central

Sales Tax (CST) on computers and peripherals from four to two percent. While

government claimed that it had done some-thing for IT too, the resellers are not

very excited about this annou-ncement as there is not much of inter-state sales

happening bet-ween the regis-tered resellers. The resellers feel that reduction

in local sales tax would have had some effect on the business, instead of the


"Today, almost every vendor/distributor has a shop in

all the regions and we would not be able to offer any price better than them to

make resellers from other states to buy here. The CST cut will not have any

impact on our business," said a leading sub-distributor of Ritchie Street



"While State government has announced CST cut in its

budget, the market is abuzz with rumors that VAT regime will come into effect

from this April. In fact, some of the resellers in the market say they have got

notice from sales tax officials to clear all pending cases at the earliest to

make way for VAT implementation," said another reseller who is a key

partner for Samsung. "I am told that government is expediting all matter

related to sales tax to close the accounts. If VAT comes into effect, what

significance the CST will have in business."

"Nothing is there to get excited about this CST

reduction and the net effect is nil on business. Sales might improve a bit but

only registered pla-yers can claim the benefit," said a repre-sentative of

a leading natio-nal brand wh-ich is into man-ufacturing mo-nitors, key-boards,

mot-herboards and peripherals.

"New CST might make the state govern-ment lose some

money instead of making any revenue or im-proving the business in Tamil Nadu.

This is just a gimmick and election stunt," remarked another peripheral

dealer in the market.

"The government has claimed to promote IT in a big way

in the state by going aggressive with e-governance and other special projects.

If government increases its spending on IT then we can expect some

business," pointed out another reseller operating outside Ritchie Street


DQW News Bureau