therefore encourage value addition and create employment in |
duty regime is discontinued under GST , the incentives could |
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the component manufacturing ecosystem . In due course of |
take the form of cash refunds as is currently done under the |
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time , as economies of scale are built up , the differential duty |
VAT system at the state level . |
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regime could be extended to more components , to further increase value addition and generate employment .
Thus , the following tax treatment needs to be considered for providing relief to the industry on an early basis :
1 . Extend the following duty structure , currently available to computer tablets and mobile phones , to desktops , laptops and servers :
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7.2 Phase II – Priority action areas
Phase II focuses on disability areas that need attention in next
6-12 months . Key recommendations are
1 . Extension of Modified Special Incentive Package Scheme
( MSIPS ): Extend the applicability period for MSIPS applications from July 2015 to end of 2020 . Include products with high domestic demand forecast such as LED
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Ÿ |
Option of concessional rate of excise duty of 2 per cent |
lights , solar cells , smart cards under MSIPS scheme |
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( without availing CENVAT credit on inputs and capital goods ) on the finished goods ( desktops , laptops , and servers or alternatively , the option of standard excise duty rate of 12.5 per cent with full CENVAT credit . |
2 . Express custom clearance : Implement express custom clearance processes for electronics manufacturing components . Currently custom clearance in India takes 3-4 days on average , increasing the landed cost of components |
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Ÿ |
Extend differential duty structure to key components / inputs of desktops , laptops and servers such as populated PCB and SMPS . These components should be subject to CVD
@ 12.5 % and SAD @ 4 % when imported . However , the manufacture of the components in India should attract
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7.3 Phase III – Next wave of changes
Phase III focuses on some of the structural changes that might need more time to be implemented . Some of the key recommendations for this phase are :
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excise duty of 2 %. The duty differential will incentivize |
1 . |
Express clearance of refund claims : Government needs to |
|
accelerated production in India in line with the ‘ Make in |
put in place a SAD , service tax refund process where the |
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India ’ vision of the government . The enhanced production |
claimant has high visibility of its claim status . Guidelines on |
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will create additional employment opportunities . |
supporting documents need to be revamped to make the |
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Ÿ |
Exemption from payment of customs duty and excise duty on procurement of all goods ( parts , components , |
claim submission process easier for claimant . Lead time of clearance needs to be reduced |
|
accessories including sub-parts for manufacture of parts , |
2 . |
Amendment in MSIPS to cover capital as well as |
|
components and accessories ) required for use in |
operational expenses |
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manufacture of the goods eligible for the differential duty |
3 . |
Deemed export status to domestically manufactured ITA1 |
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regime . |
products |
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2 . CST exemption for any inter-state purchase of components or raw |
4 . |
Introduction of interest subvention scheme to address the |
|
materials : As per current CST act , any inter-state purchase of |
issue of high cost of finance : Reduce interest cost based on |
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goods for subsequent purchase is taxed at 2 %. This adds to |
the domestic value add by the manufacturer |
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the disability of domestic manufacturers |