IEEMA seeks inclusion of electricity in GST

Indian Electrical and Electronics Manufacturers' Association (IEEMA) has made a case for bringing electricity under the proposed Goods and Service Tax (GST) ambit.
"...As per model GST law, electricity has been kept outside the ambit of GST and the state would continue to levy electricity duty on sale of electricity," IEEMA stated in its pre-budget memorandum to Finance Ministry.
The industry body said, "In case of work contracts executed in the nature of power transmission and distribution, EPC contractors, power plant, various purchases would charge GST to the Electricity and Power Transmission and Distribution Companies Credit of GST paid by the Electricity and Power Transmission and Distribution Companies to the EPC contractors would not be available and hence such credit would be an additional cost to the company."

IEEMA suggested that electricity be subsumed within the scope of proposed GST.
It has presented a pre-budget memorandum to Ministry of Finance for consideration. IEEMA has made suggestion on the issues pertaining the electrical equipment industry.
It also asked the government to remove import duties on CRGO Electrical Steel Cold Rolled Grain Oriented (CRGO) electrical steel is a critical raw material for manufacturing of transformers.

CRGO is fully imported as it is not manufactured in India. Currently, CRGO consumption in India is about 2.5 lakh MT/annum. Consumption is estimated as 11.5 Lakh MT for entire 12th Plan period (2012-2017) and 13.5 Lacs MT for entire 13th Plan period (2017-2022).

IEEMA suggested that the country needs to plan domestic CRGO availability strategically. At present, Basic Customs Duty (BCD) on CRGO Steel is 5 per cent. Nil BCD on imports of CRGO steel be allowed, till indigenous production is made available.
It suggested that since the government has embarked on the Deendayal Upadhyaya Gram Jyoti Yojana, it's imperative sectors such as electronic metres are given an impetus so as to ensure that costs become economical for the overall success of the initiative.
"We propose zero basic custom duty for all electronic components so as to facilitate overall reduction in price and also at the same time, increase export competitiveness," it said.

The industry body said that at present, corporate tax rate for Indian companies is 34.61 per cent. While the Minimum Alternate Tax (MAT) rate for firms is 21.34 per cent.
The ratio of MAT is too high as compared to normal tax rate. There is a genuine need to lower the rate so to justify the same to be a "minimum alternate tax", it said.
IEEMA suggested the MAT rate should be restricted to 50 per cent of the normal tax rate.
It also talked about ambiguity regarding input tax credit in respect of works contract. Model GST law prescribes that goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery.