Need to demystify VAT

The simplification of duty structure that Govt has initiated since past few years has given a broad direction to consumer electronics industry, says Rajeev Karwal.

The simplification of the duty structure that the government has initiated since the past few years has given a broad direction to the consumer electronics and home appliances industry. But there are still a few areas of concern.

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On a micro-level, we are concerned about the inverted duty structure wherein the import duties on some inputs are higher than finished products. This needs to be addressed in this year's Budget. This also becomes inevitable in the wake of the various Free Trade Agreements that the government has either already signed or is in the process of finalising. If the government does not put into place a transfer pricing policy, it may skew the balance in favour of companies that are not manufacturing here. The fluid transfer pricing norms, as they exist today, will give them the flexibility to offer lower prices.

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