Bangalore: The impact of the Union Budget in terms of customs duty payable by the information technology (IT) industry will be felt only from January 1, 2007 rather than immediately after the Finance Bill is adopted, the Collector of Customs, Bangalore, P.R. Chandrasekhar, said here on Monday. This is because some of the rules will come into effect only on that day.

Speaking at an open-house session on the impact of the budget, at the Indian Institute of Materials Management, Bangalore Branch, he said: "While the tariff on many inputs for the IT sector has been reduced from an average of 15 per cent to 12.5 per cent, the six per cent additional duty on certain products remains. Taking into account the cumulative effect, the duty on servers will be six per cent and that on personal computers seven per cent."

The impact of the new announcements will mean uniform rate of taxes on both imported computers and locally made ones, Mr. Chandrasekhar said. The duty on both packaged software, as distinct from customised software for personal use and computers, will go up.

The budget treats "recorded and unrecorded software" equally, which will apply to blank CDs and floppies, Mr. Chandrasekhar explained. Both wired and wireless telephony will now be taxed at the same rate.

Items which will become cheaper include imported mobile phones and DVD or hard disk drives. Computer printers will be treated as any other printing machinery and will be taxed.

Commissioner for Service Tax S.S. Lenka said service tax on some categories has gone up from 10 per cent to 12 per cent, and along with the education cess, the total increase will be 2.04 per cent. "This is quite substantial, and several new categories of services have been brought under the tax net,'' he added.

Internet telephony is now being taxed. The exemption for call centre services to overseas customers will continue.

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