Mobile phones to get costlier, thanks to GST

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With the government imposing 12% under the Goods and Services Tax (GST), most of the mobile phones are going to get expensive.

Under the new regime, locally manufactured mobile phones will get costlier, while imported phone will get cheaper.

As per the new rates under the GST, telephones for cellular networks or for other wireless networks and parts for their manufacture will attract a rate of 12%.

"Prices of phones that are imported into India are likely to go down, while those made locally may go up in cases where they are being made from low VAT states like Karnataka," Bipin Sapra, partner looking at indirect taxes at EY told ET.

For mobile phones imported and sold in India, duty was from 17% going upto 27%, which now comes down to 12%, giving imports a leg up.

For phones that are manufactured and sold within India, the duty varied from 7.5-8% to 17%, including the value added tax (VAT) which varied between 5% to 14.5%. Now that comes to 12% as well, so in some cases prices could go up.

Now, the Indian government will have to introduce sops to push its "Make in India" initiative.

"The government will now have to find an incentive to keep Make in India attractive," Sapra added.

"GST is a very complex exercise and it's a feat that a consensus has been arrived at, which bodes well for the country and the industry. We still feel a 5% rate would be appropriate, as recommended by the ministry, and the government must maintain the differential duty for mobile phones for some time," Pankaj Mohindroo, president of Indian Cellular Association, told ET.

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