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GST Council Imposes Higher Rates On Mobile Phones, Effective From April 1st 

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Almost every smartphone maker is dealing from high losses due to almost-zero sales of its products and postponement/cancellation of product losses.

By Yeti - 
1st Apr 2020
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Highlights of the Story

  • Mobile phones and specified parts to attract 18% GST versus 12%.
  • GST has been lowered to 5% from 18% for maintenance, repair and overhaul service providers in India.
  • This would lead all smartphone makers will be forced to increase prices.

If the declining overall mobile phone sales and the disruption caused by Coronavirus was not enough, mobile phones are likely to become costlier with the latest bill passed effectively from April 1. According to the reports, the Good and Services Tax (GST) on cellular handsets will be bumped to 18% from its current 12% which is likely to be handed over to the customers i.e. expensive phones.

The proposal was passed by the GST Council to increase the tax rate on certain components and mobiles due to the inverted duty structure. Many smartphone makers have already hinted towards increasing the price tag due to the increased GST. This will apparently affect the overall demand of mobile phones in India which is already taking a hit due to the non-availability of components due to the coronavirus outbreak.

Also Read: Coronavirus Impact On The Smartphone Industry

According to Manu Jain, MD at Xiaomi India, this will adversely affect India’s internet penetration as the majority of traffic comes from mobile phone users. Tarun Pathak, Associate Director at Counterpoint Research added that this isn’t probably the right time to hike the GST on phones given the uncertainty around supply change due to the global lockdown. 

As of now, Realme’s upcoming Narzo 10 and Nazro 10A will not be affected by the price hike since the company has decided to absorb the cost while other manufacturers will be handing it over to the customers. 

India Cellular & Electronics Association (ICEA) has made a proposal to Nirmala Sitharaman opposing the hike and how it will affect both local manufacturings under India’s Make in India program as well as consumers buying handsets in the country. The new GST hike has already swung into effect and it is just a matter of time until we see smartphones priced a few hundred to thousands rupees more than their price tags before April 1st.

Also Read: Samsung, LG, Vivo, & Oppo Reportedly Shut Down Production In India Due To Coronavirus



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