GST Council hikes tax on mobile phones from 12% to 18%, says Sitharaman
Mobile phones are all set to get expensive after the centre’s decision to hike the Good and Services Tax (GST) on cellular handsets to 18% from the current 12%. The decision was taken during the 39th GST Council meeting held on Saturday in New Delhi.
Finance minister Nirmala Sitharaman chaired the meeting also attended by finance ministers of States & UTs and senior officers from both center and states.
“Unanimously it was decided that the GST on mobile handsets be raised due to the inversion,” she announced in a press conference on Saturday afternoon.
Watch | GST on mobile phones hiked to 18% from 12%: Nirmala Sitharaman
While the duty levied on mobiles was currently 12%, some of its components attracted an 18 % duty.
Agencies reported earlier this week that the GST Council may end up rationalising the tax rates for five sectors, including mobile phones, footwear and textiles.
“The decision was taken to end the inverted duty structure. The mobile phone manufactures will have to decide if they want to raise the prices. The inverted cost structure was also an issue for the manufacturers,” a senior finance ministry official said.
He added that the 6% increase in GST on mobile doesn’t mean that it will translate into a hike in prices of handsets.
Manufactured goods like fertilisers, mobile phones, footwear, renewable energy equipment, and man-made yarns attract a GST of 5-12 per cent, thereby leading to an inverted duty structure, where GST on finished goods is less compared to the duty on inputs.
The inverted structure-- when the tax outgo on finished products is lower than the tax on raw materials—requires the government to refund the excess amount.
It was also reported that the panel in its Saturday meeting may decide to postpone the implementation of the new return filing system and e-invoicing from the earlier proposed launch date of April 1.
The postponement, it was reported, was partially on the account of continuing glitches on the GST portal that had resulted in several complaints by end-users. The finance minister was reported to have raised the issue with Infosys, responsible for the back-end management of the GSTN website.
GST was launched on July 1, 2017, to create a unified tax regime to end complications resulting from the need to deal with over a dozen indirect taxes including excise and service taxes.