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The IT hardware industry hailed the government's move to scale down goods and services tax rate for printers to 18 per cent but expect business to be impacted because of a high 28 per cent rate imposed on computer monitors and projectors.
The Manufacturers Association for IT (MAIT) has said that existing inventory of computer monitors, projectors and data cable running into a few thousand crores will suffer due to an increase of tax rate on them from around 14 per cent charged from end consumers at present, to 28 per cent under the new tax regime.
"We thank the government for considering the request on computer printers by keeping the GST rate at 18 per cent. However, the proposed rate of 28 per cent on monitors, projector and data cable will adversely impact the value chain. It is going to hit dealers and manufacturers alike. We expect a slowdown in business once the GST regime starts," MAIT President Nitin Kunkolienker told PTI.
He said that all dealers get credit based on existing maximum retail price inclusive of taxes.
"As per Legal Metrology Act, a dealer cannot increase prices beyond the MRP. He can only reduce it. Customers have to effectively pay around 14 per cent tax. If the government fixes a GST rate of 28 per cent on monitors etc, then who will pay rest of the 14 per cent? At 28 per cent the GST rate becomes draconian. The government should consider this situation urgently," Kunkolienker said.
Under the GST regime, a tax of 18 per cent will be levied on personal computers and a rate of 28 per cent on monitors, which will hit local manufacturers.
"It will be difficult to sell standalone monitors as they will be expensive than the ones purchased with a set of personal computers. This will adversely impact manufacturers of monitors. The price of monitors, printers, data cable will go up in the same proportion as the hike in taxes," Kunkolienker said.