New Delhi, India: The India Cellular and Electronics Association (ICEA) stated on Tuesday that it has written to state chief ministers requesting that the GST rates on mobile phones and mobile parts and components be reduced to 12 percent and 5 percent, respectively.
The 12.5 percent GST rate on mobile handsets increased tax by about 50 percent in this industry, compared to the previous national average rate of 8.2 percent. (pre-GST era). The mobile industry was still recovering from the GST rate hike when the government raised the rate by another 50 percent. (from 12 percent to 18 percent). "This increase in the GST rate has a trickle-down effect, resulting in higher consumer prices, which, in turn, lowers demand for mobile phones," the ICEA stated in a statement.
Furthermore, the decision is proving to be a disincentive to the government's 'Digital India' agenda, as the already expensive cost of smartphones is exacerbated by the hike in GST rate," the industry association said.
The ICEA also produced a research, titled “crucial GST step: Boon or Bane for the Mobile Industry”, in collaboration with Ernst & Young (EY), that highlights the importance of mobile phones in the current economic context and the taxation regulations that apply to them.
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