New Delhi: India’s apex indirect taxes body on Friday issued detailed guidelines, providing clarity on the levy of customs duty on various inputs used in mobile phones.
Import of display assembly of cellular mobile phones along with back support frames will attract basic customs duty (BCD) at the rate of 10%.
But if other items such as antenna pin, and power keys are imported along with display assembly, the whole assembly shall attract a duty of 15%, the Central Board of Indirect Taxes and Customs (CBIC) said.
The circular follows the Directorate of Revenue Intelligence (DRI) serving show cause notice to Chinese smartphone majors Oppo and Vivo over alleged duty evasion.
Handset manufacturers have maintained that the duty evasion charges were due to a lack of clarity on the levy of customs duty on key components in cellular phones.
As per the CBIC, display assembly comprises only the screen, and if the imported product includes any other component, it will amount to a violation of the exemption notification.
The industry has argued that all components which are attached to displaying content in a mobile phone will qualify as a display assembly, attracting a lower duty of 10%.
The circular is in line with the clarification issued by the Ministry of Electronics and Information Technology (MeitY) and provides a detailed list of display assemblies along with the pictures for ease of identification and assessment.
Experts say the circular would help in avoiding unnecessary litigation on account of any mis-declaration of products at the time of import.
“This clarification brings in certainty of taxation to the mobile phone manufacturers for future imports who have been at loggerheads with customs officials since long for determining the appropriate BCD rate of Display Assembly modules,” said Saurabh Agarwal, Tax Partner, EY.
A MeitY letter to the department of revenue in March this year highlighted the apparent differences in the levy of customs duty on a key component in cellular phones, the touch panel or cover glass.
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