GST - Domestic manufacturing (Countervailing duty as input cost)

Q. Have a question about countervailing duties on imports in India. I read in the eco survey that input taxes on domestic manufacturing will continue even after gst will be introduced... So the countervailing duty won't give an advantage to the domestic mfgs. Didn't understand how input taxes will be levied even after gst comes. Isn't gst an all composing tax?

We need to know what is 'input tax'?

When gst is introduced, it says the countervailing duties will become equivalent to any other type of input tax

Whether a tax is input tax or output tax is based on whether the taxed goods are further consumed in manufacturing or sold as such

Gst can be both depending on what goods we are talking about

So that will offset the disadvantage to the domestic manufacturers?

No

It says that whatever advantage the countervailing duties give to the domestic manufacturer may not materialize in gst scenario.

Sir in the case of manufacturing goods?

Let's say the goods is a car engine - is it input or output?

It is input for the car manufacturer

If a company is just selling car engines, it is output

In gst scenario, let's say a car manufacturer buys car engine

With countervailing duties in place, domestic car engine will be cheaper than or competitive with foreign car engine

However when working out gst for the car, the countervailing duty will be regarded as an input tax and will be credited to the car manufacturer making it to favour the foreign car engine.

Gst is also a value added tax

Is the countervailing duty imposed on the import or is it given as a subsidy to the domestic mfg?

It is imposed on the import

The countervailing duty will be credited to the car mfg...so in the end, the foreign engine ends up being cheaper! N the domestic mfg suffers?

Yes, So do the exemptions.

It differs in what you are importing and which price you want to bring down.