Six Percent Excise Duty Levied On All Mobile Handsets: Interim Budget

(Before It's News)

Finance minister P. Chidambaram presented the Interim budget in the 15th Lok Sabha on Monday.  With an aim to boost domestic production of mobile handsets and reduce the dependence on imports, the finance minister has restructured excise duty on mobile handsets.“The rates will be six per cent with CENVAT credit or one per cent without CENVAT credit,” Chidambaram said.

CENVAT means tax on value addition on the goods manufactured according to central excise and customs act definition. CENVAT credit relates to input goods or input services. Manufacturers or service providers are eligible for CENVAT credits on the excuse duty it pays for inputs like raw materials.

Mobile phones that cost less than Rs. 2,000 were earlier levied an excise duty of 1 per cent. Since most phones are imported, they will now be levied a uniform 6 per cent duty. which will raise the price of sub-Rs. 2,000 handsets by up to Rs. 60. The mobile handset market in India is estimated at 220 million units per annum, of which close to 25 per cent is priced up to Rs 2,000. Research firm GFK estimates about 9.5-10 million handsets are sold in the sub-Rs. 2,000 category in India every month.

Commenting on the budget proposals, Nokia India managing director P Balaji  told PTI, “This will add to the costs of entry-level phones less than Rs. 2,000, and is likely to add to the burden of the consumers of low-end phones“.

However, Pankaj Mohindroo, president of Indian Cellular Association, did not welcome the change in excise duty. He said the announcement does not benefit the handset manufacturers. “There was a six per cent excise since the last Budget in any case. Now the entry-level segment will also have a six per cent excise duty, which means prices will increase in this segment as well. However, we have to go through the fine print before coming to any conclusion,” he added.

The finance minister also said that more funds should be allocated to the telecom sector. 

Source: The Times Of India

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