It was reported that Apple would start manufacturing smartphones in Karnataka this year. Photo: Reuters
It was reported that Apple would start manufacturing smartphones in Karnataka this year. Photo: Reuters

India’s new tax regime may upset the Apple-cart

Revenue Secretary says country would find it difficult to accept Apple's demand for a duty waiver on imported components as it plans to roll out goods and services tax

February 7, 2017 6:40 PM (UTC+8)

Barely days after the announcement by a minister in India’s Karnataka state that Apple may set up a manufacturing plant in Bangalore, an official close to Prime Minister Narendra Modi has said the conditions put forward by the high-end smartphone maker may be difficult to accept as the country moves towards a new taxation regime.

The Financial daily Economic Times quoted Revenue Secretary Hasmukh Adia as saying that it would be difficult to accept Apple’s demand for a 15-year exemption on countervailing duties (CVD) payable on imported components as the country plans to roll out a new goods and services tax (GST) in the coming financial year. “There is no way we can give individual exemptions under GST regime,” he added.

Adia told the newspaper that “All of them (CVD exemptions) will go.” Taxes levied on local industry would also apply to outside corporations.

He said he was not aware of Apple’s actual demands as the Department of Industrial Policy and Promotion (DIPP) was dealing with them.”But we have limitations on giving exemptions under GST,” he added. Senior Apple executives last week met government representatives of various departments at a meeting called by the DIPP.

Karnataka’s IT Minister Priyank Kharge told Reuters that he believed Apple would “tentatively begin manufacturing iPhones in the state by the end of April, or beginning of May.”

Apple has so far not commented on the matter nor entered into any agreement with the Karnataka Government, Reuters noted.

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