Smartphone GST Rates Hike From 12% to 18%

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Smartphone GST Rate Hike

From April 1, 2020, the rates of smartphones will go on a hike as the Goods and Service Tax(GST) has been changed from 12% to 18% by the GST council. The decision was taken after the 39th GST Council meeting on Saturday. However, the smartphone industry has started to oppose this decision of Government.

“Mobile phones and specified parts to attract 18% versus 12%. All other items, if there’s a need to calibrate the rates, to remove the inversion, we can take them up in future, examination of that can happen at a later time,” said the Finance Minister Nirmala Sitharaman after the conclusion of the 39th GST Council meeting on Saturday.

39th GST Council Meeting

The revised GST rates for maintenance, repair, and other services have been reduced to 5% from 18% with the provision of availing full input tax credit(ITC). “This will assist in setting up of MRO services in the country,” the Finance Minister added.

ItemNowEarlier
Mobile Phones, Smartphones18%12%
Maintenance and Repair5%18%
Handmade and Machine-made Matchsticks12%5-18%

Experts of the smartphone industry believe that this change in the GST rates will lead to an increase in the prices f the finished good. So, it clearly means that the smartphone will become more expensive. “GST increase for phones from 12% to 18% will crumble the industry,” tweeted Manu Jain, Managing Director, Xiaomi India.

Apart from Manu Jain, there are many people who are against this decision of Government. Pankaj Mohindroo, Chairman of the Indian Cellular and Electronics Association (ICEA) gave his opinion to this decision by saying, “extremely detrimental to the vision of Digital India. Consumption will be stymied and our domestic consumption target of $80 billion (Rs. 6 lakh crore) by 2025 will not be achieved. We will fall short by at least ₹2 lakh crore. This was time for statesmanship, especially when the country is going through a crisis and as a nation, we have fallen short.”

Read Also: GST Rates Finder: Government launches App to help Tax Payers

However, due to the pandemic coronavirus, the smartphone industry has been already affected very badly due to the shutdowns of companies in China. The companies are now getting back to the production track but many of the workers have still not come back to work.

The revised rates of GST will be applicable from April 1, 2020. So, if you are planning to buy a smartphone then go and buy it now. It is expected that smartphone manufacturers might increase the rates.