Are you planning to buy a new smartphone? Your next purchase could be much cheaper amid the ongoing price hikes due to the global memory chipset shortage. According to reports, the GST Council is considering a major tax cut on mobile phones, indicating that it may drop the GST rate on handsets from 18 per cent to 5 per cent. Moreover, smartphone sales have also weakened in recent months, with shipments reportedly falling 10 to 11 per cent between April and June compared with the same period last year. If the reports are to be trusted, then the change of rates can make the smartphones much cheaper and more affordable in the Indian market. Here’s everything we know about the revised GST rates proposal yet.
According to a report by Business Today, mobile phone sales have been sliding for months, and the government wants to avoid a slowdown that hurts local manufacturing too. The shipments of the smartphones have reportedly fallen 10 to 11 per cent between April and June this year when compared to the same period last year. Moreover, the steepest drop was reportedly seen in the June quarter in six years. Rising memory chip prices worldwide have also pushed up device costs, adding pressure on an already weak market.
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The GST council is reportedly planning to reduce the GST rates on the smartphones from 18 per cent to 5 per cent to boost the sales and to ensure that the device is accessible to all. If approved, the cut could bring down prices across budget and mid-range phones, giving buyers a reason to upgrade during Diwali and other festive sales.
Some reports also suggest the reduced 5 per cent rate may be capped at phones priced up to Rs 25,000 rather than applying across the board, though this hasn’t been confirmed and the exact scope of the proposal is still unclear.
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A cut to 5 per cent would mean a noticeable drop in the final price tag on phones. For a device priced at Rs 15,000, the tax difference alone could save buyers over a thousand rupees. Budget and mid-range phones, which sell in the highest volumes, are likely to see the biggest impact if the cut goes through.
At the time of writing, the proposal had not yet been finalised. Another factor to keep in mind is that the 5 per cent GST slab is typically reserved for essential items. If the proposed change is to take effect, it would also require all states across the country to be on the same page. The GST Council is expected to take up the matter at its next meeting, scheduled for September 12, although reports suggest that the full agenda has not yet been finalised.