Concerned over Maharashtra’s proposal to increase sales tax on mobile phones, leading handset maker Nokia, along with the apex association, will meet the state government to oppose the hike saying the move would encourage the grey market.
The Maharashtra government is understood to have proposed to raise sales tax on mobile phones to 12 per cent from the existing 4 per cent across the country.
“We are going to make a presentation to the state government in next few days through the Indian Cellular Association,” Nokia India Managing Director D Shivakumar told PTI.
Opposing the hike, he said the government should understand that if it increases the tax in the state in order to encash on the booming market, the dealers and subscribers would tend to buy handsets from other states offering lower rate of sales tax.
Higher tax would lead to a flourishing grey market and the government would suffer substantial revenue losses, he said, adding with the increase in tax, the mobile phones would become costlier in the state.
“Currently, we have over 90 per cent organised market and five per cent grey market. The change in taxation can increase the grey market if tax rate was increased,” he added.
If the tax is raised to 12 per cent on a handset of Rs 3,000, a consumer will have to shell out Rs 250 more, he said.