Tax lowered from 14.5 percent to five percent as Madras High Court recognises cartridges and toners as computer peripherals.
CRN reports that Madras High Court has recognised printer cartridges and toners as computer peripherals rather than their previous classification of “non-essential capital goods or consumables”, which had been notified by the Department of Commercial Taxes four years ago and had seen them being taxed almost three times as much as in other parts of the country.
The recent verdict means that VAT on cartridges and toners will be reduced from 14.5 percent to five percent, with almost 20 companies protesting the decision; including Canon, HP and Samsung as well as distributors and channel partners, which had filed “separate writ petitions” with the court.
Muthiah Pillai, President of CONFED-ITA (Confederation of Information Technology Associations), said: “Almost four years back the department had issued a notification, which was brought into effect two years back. Elsewhere in the country, toners and cartridges attract four or five percent VAT depending on the state’s VAT rates. Although manufacturers and national distributors billed at five percent in Tamil Nadu, the department was levying a 14.5 percent tax from the partners selling to end users.”
Pillai also estimated that the notification could have cost at least Rs 100 crore ($16.4 million/€12.4 million) to the TN channels per year, which could have been increased significantly “if penalties and tax backlogs were enforced on them”.