India's Ministry of Finance commemorated the sixth anniversary of the Goods and Services Tax (GST) by shedding light on the remarkable advantages it offers over the previous tax system, burdened with multiple taxes. This complex taxation system resulted in an inflated cumulative value.
The Ministry's official social media platforms shared an illuminating image that vividly showcases the stark contrast in tax values pre- and post-GST implementation. Among the numerous benefits brought forth by GST, one noteworthy highlight is the reduced tax rate imposed on mobile phones. However, recent online discussions fueled confusion among various users, including influential social media personalities, who mistakenly celebrated a further reduction in GST on mobile phones. Notably, the shared image also encompasses the revised GST rates applicable to televisions, home appliances, and other related items.
Contrary to the prevailing misunderstanding, the GST on mobile phones in India has not been reduced. Initially, upon the implementation of GST, the government imposed a 12 percent tax on mobile phones. However, following the 39th GST council meeting, the Government of India decided to raise the GST rate to 18 percent, effective from April 1, 2020. Subsequently, smartphone companies bore the burden of paying up to 18 percent GST on mobile handsets, transferring the cost to consumers.
During the Budget 2023, the government introduced a welcome change by lowering the GST on mobile phones back to 12 percent. Regrettably, consumers have yet to reap the benefits of this adjustment due to various external factors, such as disruptions in the supply chain, the ongoing Russia-Ukraine conflict, and the fluctuating value of the Indian rupee against the US dollar. Consequently, consumers find themselves paying higher prices either directly or indirectly, as the costs of components, logistics, and related aspects remain unaffected. Moreover, despite maintaining the same price, certain smartphones may not offer the same value in terms of hardware and features. On the other hand, upgraded models featuring enhanced hardware attract significantly higher price tags.
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