mobile and electronics body, India Cellular and Electronics Association (ICEA), wants the GST on mobile phones to be reduced from the existing 18 per cent to 12 per cent and on parts and components to 5 per cent. ICEA said higher GST rates are acting as a deterrent to digital adoption. It has jointly conducted a report with EY which emphasizes on the need for right policy incentives coupled with an appropriate tax structure for the growth of mobile phone industry in India.
“The effect of this increase in the GST rate has been mitigated thereby increasing the prices for the consumer, which in turn is reducing the demand for mobile phones. Affordability will be a key for India to reach the size of USD 80 billion in the domestic market by 2026, and GST rates will play an important role,” ICEA said.
Mobile phone subscribers have crossed the one billion mark, and monthly sales of mobile phones have consistently been between 20-27 million. The production of mobile phones increased by 60 million units, the value of which Value of 19,000 crore to 33 crore units in 2014-15 2,20,000 crore in 2020-21.
The 12% GST rate on mobile handsets increased the tax in this sector by about 50% from the current national average rate of around 8.2 percent (pre-GST era). The industry was emerging with the tax hike from GST, and the government once again increased the rate by 50% (ie from 12% to 18%).
ICEA has requested the Chief Ministers of various states to reduce the GST rates on mobile phones to 12% and on parts and components to 5%.
Pankaj Mohindroo, President, India Cellular and Electronics Association (ICEA) said, “This report captures all the focal points for policy makers that highlight the increase in GST rates of mobile handsets and its parts and components. I am sure. That this study will give insight into the importance of mobile phones, and it will give enough information to the government to quash the increase in GST for mobile phones.”
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