PC buyers can breathe easy. The cost hike for locally manufactured computers ? which was on the cards after the 2010-11 Budget proposed to levy an excise duty of five per cent on specific IT items ? seems unlikely now.
With the Government notifying Special Additional Duty (SAD) exemption on these IT items on Thursday, the effect of the excise duty imposition has been neutralised to a large extent, say industry experts.
The Budget announcement of five per cent excise levy on items such as microprocessors, floppy disc drives, hard disc drives, CD-ROM drive, DVD Drives/Writers, flash memory and combo drives would have meant an additional cost for PC manufacturers to the tune of Rs 400-500 on a Rs 18,000-PC.
With the SAD exemption on these IT products now, the cost impact stands reduced to just around Rs 80 , according to Mr Ashwini Aggarwal, Executive Director of hardware association MAIT.
"The impact has been neutralised and there is unlikely to be any change in PC prices now," he said.
The Finance Minister, while moving the amendments to the Finance Bill in Lok Sabha earlier this week, had talked of exempting `certain special parts of PC' from the SAD levy, but the industry had been waiting for the list of IT items that would enjoy the exemption.
The notification issued on Thursday brings that clarity. However, when contacted, players such as HCL and HP declined to offer an immediate comment on the impact.
"It certainly takes the sting out of the previous announcement, particularly for manufacturers operating in excise free zones. The effective quantum of duty is almost restored to the pre-Budget levels and so it may not have any visible impact on computer prices," Mr Srinath S, Director, Indirect Tax, KPMG, said.
Notably, the SAD exemption on these IT items comes with a rider that the waiver is only for manufacturers and not traders. This means that channels trading in these products do not stand to benefit.