Budget 2015: IT industry gives thumbs up to removal of Special Additional Duty on IT Products

New Delhi: The Indian IT industry is welcoming FM Arun Jaitley’s announcement on removal of Special Additional Duty on IT products in his Budget 2015 speech.

Union Budget 2014-15 provided the much needed relief to domestic manufacturers of personal computers and tablets by addressing the issue of inverted duty structure suffered by the industry. However, only partial relief has been provided to the IT hardware manufacturing industry in limiting the exemption from levy of SAD to inputs / components used in the manufacture of personal computers (laptops / desktops) and tablet computers.

Thus, the instant benefit of SAD exemption does not extend to other ITA goods where the issue of inverted duty structure continues and is more pronounced. Lack of clarity on the extension of the benefit of exemption upto the sub-component level has not completely mitigated the costs being incurred by a domestic manufacturer of personal computers and tablets.

The IT industry, in this Budget was looking forward to the benefit of SAD exemption to be extended to all goods (including inputs, components and accessories as well as their parts and sub parts) when imported for use in the manufacture of ITA goods. The Narendra Modi government, it seems, has heard their wish-list.

Debjani Ghosh, MD, Intel India tweeted, “Great to see removal of SAD on IT products n reduction of tax on technical services. Will enable IT industry in India do more!”

Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research wrote on Twitter, “Great move on reduction of Special Additional Duty Taxes – solid move to help increase domestic Manufacturing.” (sic)

FM mentioned during his speech that IT-ITeS sector has raked in revenues of US dollar 119 billion in 2014-15 and directly employs about 40 lakh people.

As per the Central Statistics Office (CSO), computer and related services, whose share GDP is 3.3 per cent, grew by 14.4 per cent in 2013-14.

While the export market grew by 12.3 per cent to US dollar 98 billion in 2014-15, the domestic IT-BPM market is estimated at US dollar 20.9 billion in 2014-15, with a growth of 10 per cent