Effect of GST on Mobile Recharge & Your Phone Bill
The Goods and Services Act (GST) regime will prove to have a negative impact on the mobile phone users if you really spend good amount of your money on mobile phone bills. Apparently after the revision of new tax slabs there will be an extra 3% burden on tax payers.
Previously the telecom sector was subject to a service tax of 15%. Now under the GST regime the tax slabs have been revised as 18% to be applicable on the telecom services. For example, under Service Tax regime a postpaid buyer would have to pay a bill of INR 1150 on amount of INR 1000.
Under the new GST laws, the bill will amount to INR 1180 which means that the consumer will paying about INR 30 extra. In the same way due to the increased tax the prepaid users will compensate the tax by getting lesser talk-time for the same cost. For example, previously if you got a talk-time of Rs 85 on a recharge for Rs 100, now you will get a talk-time of Rs 82 after the implementation of GST.
Some reports also suggest that the tax increase effect might not be felt in the telecom sector as the companies might absorb that extra 3%. The step might be anticipated in order for biggies like Airtel, Vodafone, Idea etc. to tackle the competition from Jio already.
Also in the same case the industry lobbyists have also argued that government should have already lowered the tax rates in this particular industry as this is an essential service. The Government however paid no heed to the suggestion and went ahead with their decision.
The GST tax rates in the country came into effect of July 1 as a system of indirect tax applicable on goods and services. GST has replaced the current taxing system which includes Service Tax, Excise and Customs, VAT and Import tax.
Frequently Asked Questions About GST