Mehta continued: "MAIT members have unanimously and repeatedly emphasized that a long- term and holistic fiscal policy framework is needed to encourage value-addition and to give fillip to the IT hardware industry in India. Providing a favourable duty regime with appropriate incentives for component manufacturers in India would have a positive impact on the industry.  However, any benefit to the industry should be explored from the perspective of the entire value chain to avoid any tax blockages, if such benefits are to have an optimum impact.  Continuation of the existing tax structures for IT products including the benign rate of 12 percent excise duty on PCs, should be seen in this light."

Elaborating on the recommendations, Mehta added: "As technology is today considered a strategic differentiator for any business, the scope of availing the credit of the CVD/Excise duty paid on the PC and other IT equipment should be widened to include any use within the business, whether in the factory or in the office of the manufacturer. Further, in light of the move to phase out CST, the Government should immediately waive CST on IT products. This, while helping the Government to prepare for the phase-out of CST at an overall level would also provide a substantial boost to the PC sales in the country."

An external professional agency of international repute, having carried out an in-depth research and analysis of impact of taxation on the industry?s entire value chain, has put together the MAIT recommendations for Union Budget 2008-09. The highlights of the MAIT recommendations are: 

• The IT hardware industry including the PC industry currently needs a stable environment to thrive and the Government can provide this by avoiding any short-term reforms in the current duty structure.  Any changes in the duty structure should be proposed only once the Government has finalised a long-term fiscal framework.

• Computers are at present classified as a Capital Good under the CENVAT Credit Rules, 2004, whereby the credit is available only if the computer is used in the factory of the manufacturer of the final products. The scope of availing the credit of the CVD/Excise duty paid on the PC should be widened to include any use within the business, whether in the factory or in the office of the manufacturer. 

• PCs in India currently face a 4% CST for both manufacturers and service providers.  Dealers/resellers can avail a concessional CST rate of 3% on providing the statutory forms (Form-C), though the tax is non-creditab