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India defers Apple’s tax exemption requests till GST comes into force: reports

Apple Inc’s demands for tax exemptions to set up a manufacturing unit in India have been deferred by the Union Finance Ministry, PTI reports. In a written reply to the Lok Sabha, the Minister of State for Electronics and IT, PP Chaudhary claims, the exemptions cannot be accepted, as with the coming into force of the new indirect tax regime “all imports will be liable to IGST (integrated GST) and any exemptions from CGST (centre)/SGST (state)/IGST can be granted based on the recommendations of the GST Council only.” All existing exemptions from excise duty to countervailing duty will also be reviewed by the GST Council, he added.

In effect, the minister’s reply suggests the decision to give exemptions will have to be taken up by the Goods and Services Tax (GST) council. There is no exemption from basic customs duty, countervailing duty and special additional duty on of parts for repair of mobile phones, he added.

In January, Apple had requested the government of India for tax exemptions, including a 15-year exemption from customs duty. Following this, company executives met officials from the departments of commerce, industrial policy and promotion (DIPP), revenue, environment and forest, and electronics and information technology.

At the time, Ravi Shankar Prasad, the minister for communications and information technology, said: “We would very much like Apple to come and have a base in India, they have a base in China, and China is under stress. If a structured request comes from them, we will surely consider with a open mind.”

In February, Priyank Karge, the IT minister of Karnataka, was quoted: “Apple’s iPhones will be made in Bangalore and all devices will be targeted at the domestic market.”

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Meanwhile, Nirmala Sitharaman the commerce and industry minister, in a written reply to the Rajya Sabha said, “Apple in their communications, indicated their plan for selective introduction of manufacturing lines in Spring 2017.”

India is currently the fastest growing smartphone market. With sales slowing in the US and China, Apple is eyeing the Indian market for growth.

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