At the time when all handset manufacturers are struggling to cope with COVID-19, the Goods and service council has dealt a blow to the mobile phones by increasing the GST rates.
The goods and services Tax council has decided to raise GST rates on mobiles phone and specific parts like battery from 12% to 18% with effect from April 1, 2020, by Finance Minister Nirmala Sitharaman in the 39th GST council meeting.
Finance Minister said the decision was taken not to increase the prices of the phone but to correct the structure of duty on some product wherein the rate of tax paid on inputs purchased is more than the rate of tax on finished products on outward supplies.
India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo said- “The increase in GST by 6% will be extremely detrimental to the vision of Digital India. Consumption will be obstructed and our domestic consumption target of USD 80 billion (6 lakh crores) by 2025 will not be achieved. This was time for statesmanship especially when the country is going through a crisis and as a nation, we have fallen short”.
Reacting to this, Xiaomi India Managing director Manu Jain tweeted: “Increasing rates in GST for phones will crumble the industry. Everyone will force to increase the prices. This will further weaken the mobile industry’s #MakeInIndia program. The industry is already struggling with depreciating INR & supply chain disruption due to COVID-19”.