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Software, hardware goods exempted from tax

By Alladi Jayasri

BANGALORE, JAN. 7. The State Finance Department today said importers and 100 per cent export-oriented units of electronic hardware and software goods, registered with the State Government or with the Union Government, were now exempt from paying tax on entry of electronic goods, parts and accessories, computers of all kinds, computers peripherals and computer software into a local area.

The entry tax had been imposed under the Karnataka Special Tax on Entry of Certain Goods Act, 2004, which came into effect on October 1, 2004.

When the Act came into effect, it was the best news for local bodies, including corporations, city municipal councils, even gram panchayats, long denied the revenue source of Octroi, after it was abolished in 1978, and subsequently forced to depend on the State Government for their share of financial resources.

However, it left the electronics, hardware and software sector feeling cheated, as it constrained the movement of goods from outside the State, forcing them to buy within the State, and limiting their choice of purchase points. Payment of entry tax was taking away the advantage of purchasing from outside the State at competitive rates.

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