Impact Of GST On Mobile Phone Industry
Sign in

Impact of GST on Mobile Phone Industry

print Print email Email

GST or the goods and services tax is going to have an impact on all major industries of the country like pharma, banking and on the telecom industry as well and thus experts from all fields are keeping a close tab on GST news.India is the second largest telecommunications market with highest number of internet users in all over the world. As per the latest market news, the mobile phone or the category of the wireless phone has the major chunk of market share which is 97%. The Indian mobile market is growing exponentially and is already contributing immensely to India’s GDP. Also, Indian telecom has employed millions of people and will be generating more employment in future.

The reason of success of Indian telecom sector is the liberal and competitive policies of the Government like easy market entryand increasing consumer adoption.

It is believed that GST will make the telephone bills and mobile phones prices costhigher as GST will raise the incidence of taxation on the telecom sector. In current scenario, the telecom charges 15% tax and cess over phone bills of their consumers. As per the GST latest news, the GST Council has decided to put the services rendered by telecom operators at 18% tax as against the prevailing 15% service tax.

This clearly implies that on every Rs.100/- recharge in case of prepaid service or on same monthly rental in case of postpaid, Rs.3/- will be deducted as tax. It may seem that this move will ultimately affect the pocket of consumers but not if the telecom companies avail the benefit of ITC or input tax credit under the new GST rule and do not pass on the burden of tax to the consumers. But, to believe GST latest news, the industry maintains its stand that the tax is to be borne by the consumers as it has always been done and they will have to receive bulky monthly bills post the implementation of GST.

The plight of the customers doesn’t end here, as the consumers are also going to be burdened by the cost of extra 5%tax onthe purchase of mobile phones. Other than Gujarat, Madhya Pradesh and Maharashtra, in most of the states, the tax on mobile phones will nearly double to 12% according to the latest GST news. This will lead to the increase in the prices of mobile phones.

GST latest news suggests that many big-wigs of the mobile industry had appealed to the government to keep the tax low looking at the present financial condition of the debt-ridden telecom sector. This will not only impact the monthly spend of the consumers who might not get benefit of refund rules instantly but can also impact the governments initiatives like digital India, digital payments etc.

GST news today says, the mobile phone industry was hoping for a 5% GST rate and not 12% as they had envisioned the benefits of digital India revolution to be relished by the billions of people of India. The states where the tax on mobile sets is 6%, accounts for 66% of the market sales share. The rest of the states and union territories the tax range is 8% to 10% and in only three states it is 14% to 16% where mostly discounts were offered. Hence, in most of the states, the mobile phones will get costlier by 4-5%.

As per GST latest news, the new tax regime may also make locally manufactured devices more expensive as they were operating at lower tax rates since they always received benefits for being the local manufacturer. The data shows, 80% of the phones that were sold in Jan-Mar quarter were made locally. The GST news today suggests that the industry is hoping that the local manufacturingwill be continued to be given the tax benefit like before. However, only after July 1, things will get clearer.

Stay updated with the latest business news on BloombergQuint.

Sign Up For a Roundup of The Week's Top Bloggers
Follow SI :