Finance Ministry opposes levy on electronic products imports

NEW DELHI: Information Technology Ministry's proposal to levy a cess on import of electronic products to create a corpus for development of domestic industry, has been opposed by the Finance Ministry.

While the Planning Commission and the Commerce Ministry have supported the proposal, the Department of Economic Affairs (DEA) and the Department of Agriculture have expressed some reservations, sources privy to the development said.

Planning Commission, they said, is of the view that to support electronics sector, a cess may be imposed for 10 years and the quantum of it can be appropriately fixed.

But DEA felt that levying of any kind of cess was not desirable as the Goods and Services Tax ( GST) proposes to remove all kind of cesses, sources said.

The DEA feels cess on import of electronic items would be legally feasible subject to equivalent cess being levied on domestic production of that item.

That may not be a desirable aspect since all cesses are to be removed and subsumed in GST, it observed.

The Department of Electronics and Information Technology (DeitY) had proposed to levy a cess on import of electronic items with equivalent cess on the domestic production to these products to constitute a National Electronics Mission (NEM) fund.

The fund would be used for taking up initiatives for the development of the electronics system design and manufacturing (ESDM) sector.

The Department of Agriculture is also of the view that levying of a cess will increase the prices of the electronic products which could impact implementation of e-governance projects.

"Imposition of any such levy will certainly enhance prices which will impact cost of implementation of e-governance project including NeGP (National e-Governance Plan)," sources added.

As per NeGP, all government services will be made available to the citizens through electronic media.

The proposal to levy the cess, which is part of the National Policy on Electronics (NPE), was discussed by the Cabinet earlier but no decision was taken due to varied opinions.

The Cabinet than asked DeitY to place the issue before a committee of secretaries before bringing it back to the Cabinet for approval.

Most of the departments, however, had agreed to the draft NPE barring the issue of levying of cess.