Budget 2016 – Telecom Ministry wants Holiday. Tax Holiday!

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Budget
2016 – Telecom Ministry wants Holiday. Tax Holiday!
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The Telecom Ministry has asked for a 10 year tax holiday for mega projects in the Make in India drive. These are expected to attract more investments for Narendra Modi’s Make in India initiative. Excise duty exemption has also been suggested on a range of electronic equipment. This is expected to help create a manufacturing ecosystem in the country.

The 10 year tax holiday in the 15 years block is expected to attract fresh investments of over $1 billion over the next three years.

"Such proposals would be exempt from MAT (minimum alternate tax) as well for the same time frame," a senior official said.

The telecom ministry has also reportedly proposed that VoIP phones and gateways, besides laptops or notebooks priced under Rs 15,000, should be brought under the differential duty blanket. These include electronic equipment like network switches, routers and modems has also been proposed. Differential excise duty is currently levied on only mobile phones.

Including lithium ion batteries and TV set-top boxes to the list of devices that connect to the Internet has also been proposed.
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It’s important to note that after the government made mobile phone imports 11% more expensive, smartphone giants like Foxconn, Sony, Lava, Micromax and Intex took to domestic manufacturing. This has led to local production value rising 95% YoY to Rs 18,000 Crores and volumes soaring to 100 million units in 2015 according to the Indian Cellular Association

The quantum of this production is set to double by March 2016. This will see employment in the sector going up by over 60%. Manufacturers' Association of Information Technology (MAIT) that represents prominent IT companies including Dell and Lenovo has demanded similar duties should be applied to this sector to incentivize local production.

If these proposals are accepted, local production can begin in India. That will invite fresh investment. This will create the much needed local manufacturing ecosystem.