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IT has budget wishlist out for Chidambaram

The Finance Ministry seeks reduction of customs and excise duties on a host of electronics and goods used by the hardware and software industry, reports Sanjeev Sinha.

india Updated: Feb 28, 2008 14:36 IST
Sanjeev Sinha

If you are planning to buy a flat-screen monitor for your desktop or an MP3 player for your car, wait until the budget. You could land a better bargain if Finance Minister P Chidambaram agrees to the information technology ministry's pre-budget wishlist.

In a note sent last week, the ministry sought reduction of customs and excise duties on a host of electronics and goods used by the hardware and software industry. These include optic fibre cables, ICs and chipsets, packaged software and mobile handset manufacturing, among others.

The ministry is pushing for a reduction in excise duty on electronics/IT goods from 16 per cent to 12 per cent in the upcoming budget. It also wants MP3, MP4 and MPEG4 players to be exempted from both customs and excise duties.

Consumption of such small format electronic items have been growing rapidly, but much of the sales are in the grey market. The proposed duty cuts would not only sustain growth, but shift sales away from the grey market.

Corrective measures have also been sought for the mobile handsets industry in a bid to provide a level playing field and create an eco-system for it.

For this, the ministry wants goods for manufacture of parts, components and accessories of mobile handsets to be exempt from customs duty and central excise on an actual user basis.

In view of the growing popularity of video games among children and to encourage the development of gaming software in India, the ministry wants excise duty on video games/gaming consoles to be reduced to 8 per cent.

It also wants the levy of 8 per cent excise duty on packaged software to be re-examined and withdrawn in a bid to foster greater compliance with intellectual property rights. Moreover, consumers, who are not manufacturers or service providers, are at present unable to utilise the credit of countervailing duty paid on packaged software.