Introduction
The GST rate on mobile phones and accessories witnessed a notable change when the tax rate jumped from 12% to 18% in 2020 after the 39th GST Council meeting. To add to this, the 2023 Budget included an increase in import duties for materials used in phone manufacturing, which has a direct impact on mobile phone prices.
In this article, we’ll thoroughly explain GST on mobile phones and accessories, address the impact of import duty changes, and clarify the potential for claiming GST on mobile phones as input tax credit, among other essential details.
How Did the Price of Mobile Phones Change Because of GST?
Before the implementation of GST, mobile phones in India were subject to a convoluted tax structure involving various state-specific taxes, luxury levies, and VATs. However, the introduction of GST in 2017 simplified this taxation landscape, consolidating these diverse taxes into a single, nationwide tax regime. Presently, regardless of whether you’re purchasing a new or used mobile phone, the GST rate remains fixed at 18%.
GST on Mobile Phones -The Types of GST Applicable
GST on mobile phones operates with a dual-tax structure involving CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax). The Central Government administers CGST, while SGST is managed by State Governments. Both CGST and SGST are applied at a rate of 9%, which combines to make the total GST rate of 18% for mobile phones.
When SGST & CGST or IGST is Applied- Inter and Intra State Tax?
When you buy a mobile phone, 12% GST is applicable. However, the division of this tax varies depending on whether the purchase occurs within your own state or from a dealer in another state.
For in-state purchases, the 12% GST is divided equally into SGST (State GST) and CGST (Central GST). But if you’re purchasing the phone from a dealer in a different state, a single tax known as IGST (Integrated GST) at the rate of 12% is applied.
Significance of HSN Code on Mobile GST Rate on Mobile Phones and Accessories
GST on mobile phones and accessories are set based on HSN Chapter 85. Here’s a summary of common items with their corresponding HSN codes and GST rates.
| Description | HSN CODE | GST RATE |
| Audio accessories | 8518 | 18% |
| Audio devices | 8518 | 18% |
| Cables | 8504 | 28% |
| Charging devices | 8504 | 28% |
| External audio devices | 8518 | 18% |
| Mobile phones | 8517 | 12% |
| Portable chargers | 8504 | 28% |
| Protective cases and covers | 4202 | 28% |
| Rechargeable batteries | 8506 | 28% |
| Screen protectors | 3923 | 18% |
| Storage devices | 8523 | 18% |
| Thin, transparent films | 3919 | 18% |
GST on Mobile Phones in India and Battery Issues
In India, there was a significant issue related to the GST rates on lithium-ion batteries used in mobile phones. Manufacturers requested a reduction in the GST rate from 28% to 12% to address a tax inconsistency. The concern was that this disparity could affect production and pricing competitiveness. The government revised GST rates on around 50 items, including mobile accessories.
Benefits of GST to the Dealers of Smartphones
GST proves highly advantageous for smartphone dealers. With the increasing demand for smartphones, dealers with GST registration benefit from the uniform 12% taxation rate across all Indian states, ensuring price consistency. In contrast, the pre-GST era featured fluctuating smartphone prices under the VAT regime, differing from state to state.
Impact of GST on Different Mobile Phones and Accessories
Here’s how the implementation of GST on mobile phones has shaped the market and influenced the purchasing landscape in India:
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Tax-Inclusive Exchange Offers
The advent of GST on smartphones triggered the emergence of new exchange offers from prominent phone brands, facilitating the acquisition of new devices in exchange for older ones.
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Conclusion of Online Price Disparities
Pre-GST, consumers benefited from diverse and attractive deals with varying prices in retail outlets operating under the VAT system. However, the nationwide implementation of GST marked the end of such regional price disparities, influencing the landscape of online shopping.
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Impact on Mobile Device Prices
The introduction of GST had ramifications on the pricing of phones and phone accessories. While they experienced a slight uptick in cost due to increased tax rates, this realignment supports the government’s ‘Make in India’ initiative, encouraging local manufacturing.
Can ITC Be Claimed on Mobile Phones?
GST-registered dealers can indeed claim Input Tax Credit (ITC) on their mobile phone and accessory purchases. This process allows them to offset the taxes they’ve paid on these items against the GST they collect from their customers. In essence, it reduces the overall tax burden for dealers, making the taxation system more efficient.
Implication of GST on Exchange and Discount Offers
The implementation of GST on mobile phones has brought about favourable changes in exchange and discount offers for customers. With GST, all the taxes are rolled into the purchase price, making it much simpler for customers and enhancing their overall shopping experience. Furthermore, dealers have greater leeway to provide competitive prices, as they no longer need to manage a multitude of taxes such as VAT, service tax, and excise duty.
How to Calculate GST on Mobile Phones?
Follow these steps to calculate the GST on smartphone accurately and understand the final cost of your purchase:
1. Know the original price and offer price
First, determine the original price of the mobile phone (let’s say it’s ₹10,000) and the current offer price (for instance, ₹8,000).
2. Identify the GST rate
Check the applicable GST rate on mobile, which is typically 18% in India.
3. Calculate the GST amount
To find the GST amount, multiply the offer price by the GST rate divided by 100. In our example, it’s ₹8,000 * (18/100) = R₹1,440.
4. Determine the total amount
Add the GST amount to the offer price. In this case, it’s ₹8,000 + ₹1,440, resulting in a total amount of ₹9,440.
Check Out the GST Calculator
Impact of GST Rate on the Economy
The influence of the GST rate on the Indian economy has been significant. The implementation of GST replaced the earlier intricate system of numerous taxes throughout the supply chain with a consolidated tax framework, streamlining adherence and enhancing operational effectiveness. This change reduced production costs, enhancing competitiveness in international markets and boosting exports.
Conclusion
The introduction of GST on mobile phones has simplified the buying process, leading to improved customer experiences. It has allowed dealers to offer competitive prices without the hassle of multiple taxes, benefiting both consumers and the industry. In essence, GST has made mobile phone purchases more convenient and transparent.
FAQs
Is the discount received on a phone purchase subject to GST?
Certainly, the discount received when purchasing a phone is subject to GST. This is because the discount forms an integral part of the overall purchase price.
Will there be a GST rate increase for mobile phones in 2024?
As per existing regulations, there are no plans to raise the GST rate for mobile phones in 2024.
What is the HSN code for mobile phones and its chargers?
Mobile phones are categorised under HSN code 8517, while mobile phone chargers are classified under HSN code 8504.
What types of GST are imposed when purchasing a mobile phone?
When buying a mobile phone within the same State or Union Territory, both CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) are levied. If the mobile phone is purchased in a different State or Union Territory, IGST (Integrated Goods and Services Tax) will be imposed.
