New excise norm for laptops

What is it? From January 25, 2008, laptops, monitors, modems, set-top boxes, printers, fax machines, ink cartridges, keyboards, and mice have started attracting excise duty on their MRPs (as printed on the boxes) as opposed to earlier practice of the duty being levied on the cost of manufacturing.

What’s in it for consumers? It’s a consumer-friendly move in that it provides a strong incentive to manufacturers (or those who import and sell) not to inflate their MRPs (and then offer deceptive and illusory “discounts” to buyers). Consumers, frequently baffled by vastly varying MRPs for similar products or wondering how a product can be sold at a large discount on the MRP, are now likely to find greater uniformity in prices and will have more confidence in MRPs.

Will the new norm affect prices? Only marginally. Manufacturers say that the government has allowed much lesser abatement rates (i.e., the excise duty exemption on MRP, which ranges from 22.5-25 per cent on these products), than what they had demanded. And so they will have to pass the extra burden on to the consumers. But industry experts say that any increase in prices will range from nil to marginal.

— Kapil Bajaj