Indian phone makers receives Rs 20,000 cr tax bill from Customs

As per news report, Customs department has served notice to Indian handset makers like Micromax, Lava, and Karbonn over duty evasion on import of display assembly panels.

The news report also stated that as per industry these device manufacturers have raised a total tax bill of nearly Rs 20,000 crore which has been levied from 2017, also known as retrospective tax.

The tax notices come over the import of display assembly panel by phone makers, industry sources told the news source.

Prior to September 2020, there was no import duty on such panels. From October 1, 2020, under the Centre's phased manufacturing programme an import duty of 10% is levied.

Assembly panels come with a host of mechanics, where the government levies 15% import duty since 2017. These components comprise 15% of mobile phones' bills of materials, the report said.

The tax demand is a result of wrong interpretation by the Customs officials, the Indian Cellular and Electronics Association (ICEA) has told the IT ministry and the Finance Ministry's department of revenue, the news source reported.

“The mobile phone’s bill of materials’ supply chain is very complex and involves numerous parts, components and sub-assemblies,” ICEA chairman Pankaj Mohindroo had stated in a letter to the Meity secretary, revenue secretary, and the finance secretary in January this year, the news source reported.

“Display assembly along with touch panel and cover glass assembly (which are essentially composite parts of generic sub-assembly with display assembly) were brought under 10% basic custom duty from October 1, 2020. Post this directorate of revenue intelligence (DRI) has started questioning all the mobile phone manufacturers about the imports of display assembly,” the ICEA chairman told the news source.