Indian High Court Reduces VAT on Toners & Cartridges

India’s Madras High Court recently acknowledged printer toners and cartridges as computer peripherals, and ruled that they be assigned the lower VAT of 5%.

Four years earlier, the Department of Commercial Taxes recognized these products as non-essential capital goods or consumables and classified them under the 14.5% VAT category. However, about 20 companies including Canon, HP and Samsung filed separate petitions to the High Court protesting that ruling. The High Court has now overruled the earlier classification.

Muthiah Pillai, President, CONFED-ITA, explained, “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 fetch a 4% or 5% VAT depending on the state’s VAT rates. Although manufacturers and national distributors are billed at 5% in Tamil Nadu, the department was levying a 14.5% tax from partners selling to end users.”