In a follow up to the
story '
href="https://www.dqweek.com/isoda-claims-round-one">ISODA
claims round one', dated December 27, 2010 - January 2,
2011, DQ Week tried to delve deep into the issue and seek
further clarifications from the premier association along with some
of the leading distributors and principals. Now that two weeks have
passed since the story was carried, ISODA informed that the
distributors have not yet come to a particular stand on the whole
issue. The distributors are still contemplating on whether they
should go for customs duty (CVD) or go back to service tax route. The
association had earlier claimed that the government notification has
put the ball in the court of the distributors and vendors.
Commenting on the feedback
received by the association from the distributors, Harinder Salwan,
Secretary General, ISODA, said, “Currently, distributors are facing
the problem of defining the MRP of the software product, as this is
possible only in retail boxes. For paper licenses, they have not been
able to define for the simple reason that the price changes depending
upon the quantity.” ISODA has not received any
clarity even from the principals. Salwan said, “We are already in
talks with principals like Microsoft and Adobe; and they are still
conducting internal meetings to come to a conclusion. By this
weekend, they might come to a decision on what stand they are going
to take. So far, we have not seen any difference in the approach from
either the distributors or the principals. According to them, it is a
status quo.”
Meanwhile, distributors
are toeing on similar lines with what DQ Week carried in the
issue last time. They still believe that there are some gray areas
that need to be addressed and unless they get some clarity, they can
not come to a consensus.
Krishna K Choudhary,
Founder and Director of
href="https://www.dqweek.com/rashi-appoints-universal-for-altec-lansing">Rashi
Peripherals, pointed out that like what
he had mentioned last time, the notification is hardly going to make
any difference in taxation as far as customs duty or service tax is
concerned. This will not bring any change in the pricing of the
product in the market. Cost of the products remain the same. “While it
is a known
fact that there will be either customs duty or service tax, it is
hardly going to make any difference, as the rate of customs duty
(CVD) and service tax is same ie 10.3 percent. The only difference
here is that the customs duty on products that are sold off the
shelf, are levied on MRP and that might be a little costly. There
would be marginal difference when the product would be charged to
duty at MRP base. Rest products are being sold or imported by either
paying customs duty or service tax. In fact, we have been doing
business 'pre' as well as 'post' notification and we have not changed
our price policy,” added Choudhary.
Another national
distributor, on the condition of anonymity, commented that there are
still some confusions prevailing over the notification that has come
from the Ministry of Finance. The gray areas exists even now. Till
now, only one part of the issue has got addressed in this
notification. We are making all the efforts at the government level
with the help of Microsoft, and we are just waiting for the day when
the government comes out with all the clarifications. It is up to the
government to give us a clear picture on this whole issue.
For the principal's
perspective, Microsoft again couldn't be contacted at the time of
going to press.
However, ISODA still
maintains that it has won the battle, as the association believes
that it is a workable proposition for everyone. The association also
alleges that the distributors were not a part of the negotiations
with the government. In fact, it is inviting the distributors to come
out in open in terms of giving clarity and discussing the same on the
negotiation table. “We sell the products;
distributors are the just entry and exit points for these products in
the country. They have no say in defining the processes and since
they are doing so, it is creating a whole lot of confusion. They were
not willing to share their talks and if they do not do so, they have
to accept what the industry says. Since, they don't want to be part
of the negotiation with the government, they can't define the
processes in the industry,” opined Salwan.
Meanwhile, at its upcoming
Tech Summit event in Bangkok, ISODA is going to take a call and by
that time, it expects the distributors and principals to come out
with a clarity. The association is hopeful to be back from the Summit
with some resolution in place.