GST: Mobile phones to get expensive

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If you are planning to buy the new phone then buy it before July, as Goods and Services Tax (GST) Council has finalized 12 percent tax rate.

GST:  Mobile phones to get expensive

Under the new rule, all phones which are manufactured locally will get costlier and imported phone will get cheaper.

Narinder Kumar, Lead Analyst, Telecom Practice, Cyber Media Research said "currently 75 percent of mobile handsets are manufactured in India, a price of these handsets will increase by at least 5 percent post GST implementation. The price of imported mobile handsets will witness a downward trend as they are currently attracting higher taxes than proposed GST."

He said,"continuing current import duty structure will mitigate benefits of 'Make in India'. Higher import duty plus GST on imported mobile handsets seems a potential way to safeguard domestic manufacturers. On top of it, revision of GST in future based on category and price segments will be beneficial for an industry as well as consumers."

Tarun Pathak, associate director at Counterpoint Research told Gizbot that, "we assume that Government will bring some kind of incentive for those who are assembling
phones here."

However, Aruna Sundararajan, secretary IT and telecom said that MeiTY will push for imposing a basic customs duty (BCD) on top of GST rate on imported devices to ensure that making phones locally would continue to be cheaper for companies compared with imports, ET reported.

SEE ALSO: TRAI receives 6.03 mn requests for MNP in March

The Goods and Services Tax (GST) Council has also finalized 18 percent tax rate on telecom services, which is three percentage points higher than the current 15 percent services tax.

The sector is also disappointed with announced rate of 18 percent.

"We had submitted to the govt that consideration must be given to the present financial condition of the sector and any rate beyond the existing rate of 15 percent makes the telecom services more expensive for the consumer. It will augment the existing burden of the industry further. This is also likely slow down the planned rollout of infrastructure across the country and will have an impact on flagship govt initiatives like Digital India, Cashless India, and others," said Rajan S Mathews, Director General, COAI.

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