The Goods and Services Tax (GST), headed by Finance Minister Nirmala Sitharaman, has increased taxes on smartphones to 18 percent from 12 percent. The India Cellular and Electronics Association (ICEA) claims it will also increase the prices of smartphones in the coming days.
Smartphones GST Rate Hike
The GST council, however, deferred the tax structure of fertilizers, yarn (human-made), fiber and footwears, to the next meeting.
Finance Minister also added, “Smartphones and it’s specified parts to attract 12% versus 18% GST rate hike.” And all other items, if there’s a need to calibrate the rates, to remove the contradiction. The GST council can take them up in the future, after the conclusion of the 39th GST Council meeting last Saturday.
In an interview with IANS, Chairman of ICEA, Pankaj Mohindroo, said that the increase in prices would be disturbing to the vision of digital India. “Consumption of smartphones will be hindered, and our domestic consumption target of achieving $80 billion (₹ 6,00,000 crores) by 2025 will fall short by at least ₹ 2,00,000 crores”, he said.
GST RATE (%)
While concluding the GST Rate (%) hike, the Finance Minister also added, GST for maintenance, repair, and overhaul services in India has been lowered to 5% from existing 18% earlier, with the terms of availing full input tax credit (ITC). “This new GST Rate (%) will assist in setting up maintenance, repair, and operations (MRO) services in the country itself.” GST rate on handmade and machine-made matchsticks was also reconciled to 12%, as can be seen in the image attached above.
Companies also wrote a letter to the FM, urging her to roll back to the proposed GST hike, saying that the GST rate hike at the when the sector is already suffering from supply chain delay because of the Covid-19. Due to the hike in GST Rate (%), it will surely make things even worse for the smartphone industry.
Manu Kumar Jain, the head of Xiaomi India, was also dissatisfied with the decision, saying that the hike “will break the smartphone industry.” In a tweet tagging PM and the FM to reconsider the decision. Xiaomi’s India head also wrote, even if the government has already decided to go ahead with this hike, “At least all devices under $200 (₹ 15,000) must be exempted from this hike”.
The industry is already struggling with depreciating INR & supply chain disruption due to Covid-19.
At least all devices under $200 (=₹15,000) must be exempted from this. https://t.co/hOMpSpTyKk
— Manu Kumar Jain (@manukumarjain) March 14, 2020
Meanwhile, A Research director with IDC, Navkendar Singh, also agreed with Jain and Mohindroo, saying that the GST hike is terrible for all the stakeholders in the country. He also said: “This is a textbook case missing the wood for the trees. This GST hike will also break any hope of growth in the near-term, which anyway will be challenging now due to the outbreak of coronavirus on both supply and demand”.