Effect of GST on Mobile Phone Prices in India

The GST has already been implemented in the country and has surely seen many implications on the Indian market and it has also truly benefited the smartphone market for the better. But according to finance experts the consumers won’t have to bear any extra burden of Goods and Service Tax implemented from the 1st of July.

The smartphone market also enjoyed the change with huge discounts on the existing Pre-GST price cuts to ensure sales in the last days of June. On an average the mobile sellers had offered a discount of about 10% on their phones before GST kicked in.

As far as the imported phones are concerned they will be charged with a 10% GST and the same rate is applicable on the locally manufactured phones. “The import duty will be at least 10 per cent, and this is being done to ensure that manufacturing in India remains lucrative vis-a-vis importing the devices from China, or elsewhere,” an official source said.

The good thing about the change is that the government is also transferring benefits to local firms. Local brands are likely to get incentives from the IT Ministry. The government is giving incentives to these companies so as to prevent a hike of 4-5%. The good news about it is that the GST burden is not likely to be passed on the smartphone market.

This means that the GST regime will ensure more of a benefit to the customers as smartphones will become more affordable. It does not mean that the smartphone market will remain the same. Due to the new GST rules applicable as of July, the tax rate applicably are going to be uniform for whole of the industry.

This move is going to be a bane for companies like Micromax, Lava, and others. To neutralize the impact, the industry is going to offer incentives to these companies. Soon after GST being implemented, Apple was the first one to make the price change announcement in India.

The iPhone 7 Plus (256 GB ) is the first one in the portfolio to see the significant price cut. Now it is available for a price of INR 85,400 which is almost INR 6,600 cheaper then the previous price tag of INR 92,000. The iPhone SE (128 GB) has also got a price cut of INR 2,200 and now will be available for INR 15,000. The 12.9 inch iPad Pro will now be available for a price tag of INR 97,000 which was previously INR 1 lakhs.

Apple although giving the discount to the customers refused to comment whether the price slash was in relation to the GST. On the other hand the local market players like Micromax and Lava are highly unlikely to revise their prices and no announcement has been made by the companies on the same.

Interestingly enough, Apple has seen a profit growth percentage of 20% in the last quarter of March 2017. Apple CEO Tim Cook has also admitted that India is an under-penetrated market and the company need to strengthen their local presence.

The price of ASUS Zenfone 3 (ZE552K) has also been reduced by INR 3000. The phone was previously priced at INR 19,999 and now will be available for INR 16,999. ASUS Zenfone 3 (ZE520KL) has also seen a price cut of INR 2000 and is now available for INR 15,999. The ASUS Zenfone 3S Max has also seen a price cut of INR 1000 and is now available at INR 13,999.

Currently many other brands are yet to even make a comment on the matter and the prices of many of the smartphones remain unchanged. But under the new tax regime smartphone buyers are likely to enjoy various benefits such as price cuts or even discounts owing to competition.

The government has taken the move because the weighted tax average of smartphones amounts to be 12% on the VAT system and same is being continued for GST. But previously a tax burden of about 13.5 % was levied on the smartphones. This move by finance ministry will reduce the GST rate by 1.5 % directly cutting down the cost of mobile phones. And if some companies do not get the incentives, then they will offer 5-10% discounts starting this month to lure the smartphone buyers in India. This means that even if everything happens it is a win-win situation for the buyers.

Disclaimer: The discounts mentioned above are being offered by online portals and some of the offline stores. Please contact your nearest mobile phone seller or an online store to get exact price quote. The prices may vary depending on the smartphone and the city/state.

Frequently Asked Questions About GST

1) What is the meaning of GST?

2) What are the GST Tax Slabs?

3) What are the benefits under GST?

4) What is the Full Form of GST?

5) How GST Works?

6) When will GST be Implemented?

7) What are the Taxes that GST Replaces?

8) What will be the Short-term Impact of GST?

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Click on Page 2 to Know How GST Will Effect Your Mobile Phone Bills >>>>

Effect on GST on Your Mobile Phone Bills

The telecom sector however is likely to bear the burden of the GST regime. Earlier telecom was subject to a 15% service tax and in contrast now it will be subject to a new 18% GST tax rate. In simple terms the burden will be beared by the final end user. If a person is a post paid user with a bill of INR 1000, you will be paying Rs. 30 extra.

And even if you are a prepaid subscriber and you get a recharge done for INR Rs 100 you will get a talk time of Rs 82.20 instead of the previous 83.96. So that means that your mobile bills will have to bear the burden of 3% net effect on tax. Also all the major plans like Airtel, Vodafone and Idea will also change the prices or either reduce their services at the same rate.