India lost almost $1.5 billion in 2020 and $4.9 billion in 2017-20 in revenue by not taxing electronic transmissions, a Geneva-based think tank South Centre said in a research paper.
According to a report in The Economic Times, a research paper by South Centre, which is an intergovernmental organisation of developing nations, stated that India lost its revenue in imports from items like movies, music, and video games. The paper, which comes a week ahead of World Trade Organization (WTO) ministerial meeting, said that custom duties should “regulate conspicuous consumption through imports”.
WTO members, in a temporary moratorium, have agreed that they cannot impose custom duties on electronic transmission since 1998. The moratorium has been periodically extended at WTO ministerial meetings even though some nations want to make the pact permanent while India has opposed this rule.
The paper said India lost $796 million in 2020 and $2.55 billion in 2017-20 in revenue based on applied tariffs (the actual duty levied by nations).
Developing and least developed nations are losing tariff revenue especially during pandemic when imports of digitised goods have risen. Developing and least developed nations lost $56 billion in tariff revenue during 2017-20, the research paper said.
ALSO READ – Digital taxation: How a consensus-based approach may benefit Indian economy
“Not only are they losing the fiscal space but are also losing their regulatory space as they are unable to regulate the growing imports of digitisable products, especially of luxury items like movies, music and video games,” South Centre said.
India lost more than $500 million in revenue, as estimated by UNCTAD in 2019. “This shows how the revenue loss is gaining pace because of the moratorium,” reported The Economic Times quoting an official.
The paper said, noting that revenue loss is from imports of only 49 products, “With no clarity on the definition of electronic transmissions (ET) and thereby on the scope of the moratorium, the continuation of the WTO moratorium on customs duties on ET can lead to substantive tariff revenue losses for developing and least developed countries in the future”.
The think tank has estimated a loss of over $100 million for China, Indonesia, Pakistan, Russia, and South Africa while for India, Mexico, Nigeria, and Thailand, it exceeds $1 billion.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
