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The GST rate on mobile phones and accessories witnessed a notable change when the tax rate jumped from 12% to 18% in 2020 after the 39th GST Council meeting. The GST rate on mobile phones has remained stable since then at 18% following the consolidation of rates in previous years. Alongside this, recent Union Budgets have rationalized import duties on components (like camera lenses and batteries), which helps support the domestic "Make in India" manufacturing ecosystem.
In this article, we'll thoroughly explain GST on mobile phones and accessories, address the impact of import duty changes, and clarify the potential for claiming GST on mobile phones as input tax credit, among other essential details.
Key Takeaways
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In India, the GST on mobile phones is 18%, which is split evenly between CGST and SGST for in-state sales and IGST for inter-state transactions.
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In terms of taxation, mobile phones are classified as Harmonised System of Nomenclature (HSN) code 8517.
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Dealers gain from the Input Tax Credit (ITC) and consistent pricing, which increases efficiency.
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GST rates for mobile accessories are as per the HSN codes, generally 18%.
What is the GST on Mobile Phones in India?
The Goods and Services Tax (GST) is a single, unified tax applied to the sale of goods and services in India. It replaces other indirect taxes such as VAT, excise, and service tax. GST standardises taxation on mobile phones, ensuring consistent rates and transparent pricing across the country. Currently, mobile phones carry 18% GST. This uniform taxation streamlines pricing, provides dealers with an Input Tax Credit (ITC), and makes transactions visible to consumers.
How Did the Price of Mobile Phones Change Because of GST?
Before the implementation of GST, mobile phones in India were subject to a convoluted tax structure involving various state-specific taxes, luxury levies, and VATs. However, the introduction of GST in 2017 simplified this taxation landscape, consolidating these diverse taxes into a single, nationwide tax regime. Presently, regardless of whether you're purchasing a new or used mobile phone, the GST rate remains fixed at 18%.
GST on Mobile Phones -The Types of GST Applicable
GST on mobile phones operates with a dual-tax structure involving CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax). The Central Government administers CGST, while SGST is managed by State Governments. Both CGST and SGST are applied at a rate of 9%, which combines to make the total GST rate of 18% for mobile phones.
When SGST & CGST or IGST is Applied- Inter and Intra State Tax?
When you buy a mobile phone, 18% GST is applicable. However, the division of this tax varies depending on whether the purchase occurs within your own state or from a dealer in another state.
For in-state purchases, the 18% GST is divided equally into SGST (State GST) and CGST (Central GST). But if you're purchasing the phone from a dealer in a different state, a single tax known as IGST (Integrated GST) at the rate of 18% is applied.
Also Read, What is GST and Types of GST?
Significance of HSN Code on Mobile GST Rate on Mobile Phones and Accessories
GST on mobile phones and accessories is set based on HSN Chapter 85. Here's a summary of common items with their corresponding HSN codes and GST rates.
|
Description |
HSN CODE |
GST RATE |
|
Audio accessories |
8518 |
18% |
|
Audio devices |
8518 |
18% |
|
Cables |
8544 |
18% |
|
Charging devices |
8504 |
18% |
|
External audio devices |
8518 |
18% |
|
Mobile phones |
8517 |
18% |
|
Portable chargers |
8507 |
18% |
|
Protective cases and covers |
4202 |
18% |
|
Rechargeable batteries |
8507 |
18% |
|
Screen protectors |
3919 |
18% |
|
Storage devices |
8523 |
18% |
|
Thin, transparent films |
3919 |
18% |
GST on Mobile Phones in India and Battery Issues
In India, there was a significant issue related to the GST rates on lithium-ion batteries used in mobile phones. Manufacturers requested a change in the GST rate from 28% to 18% to address a tax inconsistency. The concern was that this disparity could affect production and pricing competitiveness. The government revised GST rates on around 50 items, including mobile accessories.
Benefits of GST to the Dealers of Smartphones
GST proves highly advantageous for smartphone dealers. With the increasing demand for smartphones, dealers with GST registration benefit from the uniform 18% taxation rate across all Indian states, ensuring price consistency. In contrast, the pre-GST era featured fluctuating smartphone prices under the VAT regime, differing from state to state.
Impact of GST on Different Mobile Phones and Accessories
Here's how the implementation of GST on mobile phones has shaped the market and influenced the purchasing landscape in India:
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Tax-Inclusive Exchange Offers: The advent of GST on smartphones triggered the emergence of new exchange offers from prominent phone brands, facilitating the acquisition of new devices in exchange for older ones.
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Conclusion of Online Price Disparities: Pre-GST, consumers benefited from diverse and attractive deals with varying prices in retail outlets operating under the VAT system. However, the nationwide implementation of GST marked the end of such regional price disparities, influencing the landscape of online shopping.
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Impact on Mobile Device Prices: The introduction of GST had ramifications on the pricing of phones and phone accessories. While they experienced a slight uptick in cost due to increased tax rates, this realignment supports the government's 'Make in India' initiative, encouraging local manufacturing.
Can ITC Be Claimed on Mobile Phones?
GST-registered dealers can indeed claim Input Tax Credit (ITC) on their mobile phone and accessory purchases. This process allows them to offset the taxes they've paid on these items against the GST they collect from their customers. In essence, it reduces the overall tax burden for dealers, making the taxation system more efficient.
Implication of GST on Exchange and Discount Offers
The implementation of GST on mobile phones has brought about favourable changes in exchange and discount offers for customers. With GST, all the taxes are rolled into the purchase price, making it much simpler for customers and enhancing their overall shopping experience. Furthermore, dealers have greater leeway to provide competitive prices, as they no longer need to manage a multitude of taxes such as VAT, service tax, and excise duty.
How to Calculate GST on Mobile Phones?
Follow these steps to calculate the GST on smartphone accurately and understand the final cost of your purchase:
1. Know the original price and offer price: First, determine the original price of the mobile phone (let's say it's ₹10,000) and the current offer price (for instance, ₹8,000).
2. Identify the GST rate: Check the applicable GST rate on mobile, which is typically 18% in India.
3. Calculate the GST amount: To find the GST amount, multiply the offer price by the GST rate divided by 100. In our example, it's ₹8,000 * (18/100) = ₹1,440.
4. Determine the total amount: Add the GST amount to the offer price. In this case, it's ₹8,000 + ₹1,440, resulting in a total amount of ₹9,440.
Check Out the GST Calculator
Impact of GST Rate on the Economy
The influence of the GST rate on the Indian economy has been significant. The implementation of GST replaced the earlier intricate system of numerous taxes throughout the supply chain with a consolidated tax framework, streamlining adherence and enhancing operational effectiveness. This change reduced production costs, enhancing competitiveness in international markets and boosting exports.
Conclusion
The introduction of GST on mobile phones has simplified the buying process, leading to improved customer experiences. It has allowed dealers to offer competitive prices without the hassle of multiple taxes, benefiting both consumers and the industry. In essence, GST has made mobile phone purchases more convenient and transparent.
