Commercial PC users not hit by new excise rule

NEW DELHI: The proposed retail sale price-based excise assessment for personal computers (PCs) and peripherals — announced in the recent Budget — would not cover sales to institutional and industrial customers - thereby leaving the price of these products unchanged within the commercial category.

However, in case of excise assessment for household sales, the IT industry would soon hold discussions and approach Abatement Committee with suggestions on the suitable level of abatement that would be in tune with the cost built-up between the ex-factory price of these products and their end-user price.

“The clarification by a senior finance ministry official during our recent meeting means that a bulk of the hardware sales will not get affected with the new assessment system. It is unlikely that there would be a price change in this category,” said MAIT executive director Vinnie Mehta.

Institutional consumers buy packaged commodities directly from the manufacturers/packers for the service industry. Industrial consumers buy packaged commodities directly from the manufacturers/packers for using the product in their industry for production.

According to MAIT, for 2006-07, the commercial category is expected to account for 77-78% of the overall PC sales of over 6.5 million units. During the first half of the fiscal itself, the business segment accounted for 77% of sales, registering a 7% growth on a year-on-year basis and 19% on a sequential basis.

Households accounted for 23% of the total desktop market with sales crossing 5.7 lakh units. This represented a growth of 12% over H1 2005-06.

It may be recalled that the Union Budget has proposed to bring products like PC (including laptops and portable computers), printers, monitors used for automatic data processing machine, computer keyboards, scanners, mouse, computer plotter, fax machines, modems and set top boxes (used for accessing the internet and for television sets) under the new system of RSP based excise assessment.

The excise duty is currently applied on the ex-factory price. RSP-based assessment would make excise duty applicable on the price sold by the distribution channel (end-user price), which will include dealer margins.

moumita.bakshi@timesgroup.com