The Department of Commerce (DoC) has asked the Finance Ministry to impose a border adjustment tax (BAT) on imports to offset the impact of levies – electricity duty, clean energy cess, fuel and royalty, reported The Times of India.
“Such taxes (which are not part of GST), while resulting in an increase in the cost of production of domestic goods, also place them on an unequal footing vis-a-vis imports rendering our exports uncompetitive,” the report quoted Commerce Secretary Anup Wadhawan as saying.
Moneycontrol could not independently verify the report.
As per the report, coking coal – which faces a clean energy cess – constitutes 40 percent of the input cost in steel-making. The share of non-creditable taxes in the sale price of hot-rolled coils (HRCs) is estimated to be around 5 percent of the sale value as against 3 percent in the case of imports, it added.
Wadhawan, the report said, sought an urgent status report to brief Commerce Minister Piyush Goyal on the proposal. Goyal, who took charge as a minister six months back, is looking to discourage imports of non-essential items to boost local manufacturing.
On July 1, 2017, a number of state and central levies were subsumed into the Goods and Services Tax (GST), with the rest being done away with. Now, the DoC feels those levies, which were either done away with or did not make a comeback in some form, is resulting in the unavailability of input credit on these taxes.
To mitigate this, the report said the DoC had suggested two options: 1) levy BAT; and 2) allow for refund of non-creditable taxes. It is currently partial to the first option.LIVE NOW… Video series on How to Double Your Monthly Income… where Rahul Shah, Ex-Swiss Investment Banker and one of India’s leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.
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