Topics Covered: Security challenges and their management in border areas; linkages of organized crime with terrorism.
Border Adjustment tax
Context: A NITI Aayog member has favoured imposing a border adjustment tax (BAT) on imports to provide a level-playing field to domestic industries.
This suggestion comes in the backdrop of the USA-China trade tensions (trade war) which are expected to rise even further post-Covid-19.
What is BAT?
BAT is a duty that is proposed to be imposed on imported goods in addition to the customs levy that gets charged at the port of entry.
BAT is a fiscal measure that imposes a charge on goods or services in accordance with the destination principle of taxation.
Generally, BAT seeks to promote “equal conditions of competition” for foreign and domestic companies supplying products or services within a taxing jurisdiction.
The Indian industry has been complaining to the government about domestic taxes like electricity duty, duties on fuel, clean energy cess, mandi tax, royalties, biodiversity fees that get charged on domestically produced goods as these duties get embedded into the product.
But many imported goods do not get loaded with such levies in their respective country of origin and this gives such products price advantage in the Indian market.
Sources: the Hindu.