Finance Minister Nirmala Sitharaman, head of Goods and Services Tax (GST) Council, on Saturday announced that the GST Impact on mobile phones will be increased from the current rate of 12% to 18%. The rate is said to be applicable from April 1, 2020. The increase in rates is said to affect the country’s smartphone industry badly. The change will hit the market harder which is already facing a shortage of supplies from China because of the outbreak of Coronavirus.
Mobile phones and specified parts to attract 18% versus 12%. All other items, if there’s a need to calibrate the rates, to remove the inversion, we can take them up in future, examination of that can happen at a later time
GST for maintenance, repair and overhaul service providers in India has been lowered to 5% from 18% now, with provision of availing full input tax credit (ITC). . “This will assist in setting up of MRO services in the country,” the finance minister added. GST rate on handmade and machine-made matchsticks was also rationalised to 12% from present range of 5% and 18%.
“Increase of GST rate on mobile phones to 18%, arguably to correct the inverted duty structure, may lead to increase in prices,” said Pratik Jain, Partner and Leader Indirect Tax, PwC India
“Given the current economic scenario, perhaps an option to provide quicker refund of input tax credit (including on input services which is not allowed currently) could have been explored,”