Mobile Phones to Attract 18 Per cent GST From April

  • Currently, mobile phones attract only 12 per cent GST
  • It is to be noted here that there are thousands of small retailers in India which only sell smartphones

Mobile phones will attract 18 per cent GST rate starting 1st April 2020. The GST rate for mobile phones right now is 12 percent. These announcements were made last week at the conclusion of the 39th GST Council meeting.

A report published by the Economic Times said that the GST hike in mobile phones will hit jobs and consumers. “To strike the sector with a higher GST at this stage is the equivalent of killing the goose that lays the golden egg. Not a savvy move by any stretch,” Economic Times quoted India Cellular and Electronics Association’s (ICEA) statement.

Smartphone market in India

According to the International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker, India’s smartphone market shipped 152.5 million units in 2019, with a modest 8.0 per cent year-over-year (YoY) growth. India also became the second largest smartphone market in 2019 after China but was still ahead of the USA. The overall mobile phone market, with annual shipments of 282.9 million units, declined by (-12.3 per cent) YoY in 2019 due to fewer 4G feature phones.

The Economic Times report also quoted Manu Kumar Jain, global VP, Xiaomi, saying that the move will force smartphone brands to hike prices of products. He also stated that the industry is struggling owing to depreciating rupee and the Coronavirus situation.

ICEA, All India Mobile Retailers Association (AIMRA) and Confederation of All India Traders, as per the report, are joining forces to demand a rollback. It is to be noted here that there are thousands of small retailers in India which only sell smartphones. IDC expects the India smartphone market to see modest single digit growth in 2020 as well.