Still clueless about the implications of Budget 2007-08 on your IT investments? What would be the impact on prices of computers and other peripherals? It's time for you to lean back in the chair and just take a look, what all the budget has in it's kitty for you.
Politically correct. That's the one word to explain the union budget 2007. In an attempt to satisfy all segments of people, Chidambaram presented a budget with less tweaks and tugs. It's a flat budget. We were used to see such kind of budgets in the Pre- Manmohan era before economic reforms. Actually we were in the habit of getting a budget with more emphasis on technology. After a long time came a budget focused on basic infrastructure and agriculture. For many of the industry experts it was a surprise package.
For the IT sector, this budget is a mixed bag. The Union Budget has tried to resolve the problem of varying tariff structure in the computer manufacturing industry. In the budget, an excise duty of 12 percent has been proposed on computers. By doing this, the earlier 7% additional duty on computers will no longer be applicable.
Currently, this duty would be levied on the minimum retail price (MRP) of hardwares such as desktops, laptops and peripherals, including monitors, liquid crystal displays (LCDs), printers and scanners. As a result, you may witness an increase in the price of these products by two or three percent.
“The introduction of the excise duty will have a minimal impact on the computer prices. The prices are expected to remain by and large stable”says Vinnie Mehta, executive director, Manufacturing Association of Information Technology(MAIT).
The computer hardware engineering services have also been taken under the ambit of service tax which were exempted from it till date. At present, the effect may seem to be negligible on price but very soon we will see a contribution in increased price of hardware.
In the union budget, DVD drivers and DVD writers has been categorised as flash memory and hence they would be exempted from excise duty now onwards. This will result in slight decrease in their price. Experts say that this decrease will neutralise the increase caused by the duty levied on computers. “In cases where there could be marginal price increase, it would be eventually neutral
I am a journalist driven by passion. I have worked on different beats of journalism ranging from politics,sports,film,entertainment and business for more than eight years. Currently I work with INDIA TODAY, the leading Indian magazine as a Special Correspondent writing on politics and governance.
