GST on Mobile Phones

GST on Mobile Phone

In today’s world there is merely anyone who doesn’t carry a mobile phone. Considering that now everything can happen with just a click, a mobile phone has become a big necessity. The smartphones in today’s age have evolved over time. Starting from communicating with your dear ones to watching movies to filling in important information to searching for all the relevant information, smartphones have it all! But you will be surprised to know that GST is charged on mobile phones too. The current GST on mobile phones is 18% which is a uniform rate that is charged to all the users all over the country, no matter in which state you reside. 

This blog will give you in-depth information related to GST on mobile phones starting from its price under the GST regime to its applicability to many more. 

Price of Mobile Phones Change under GST Regime

Even before the excise duty, VAT And GST were started to be levied on mobile phones, the rates of VAT used to vary from one state to another, which is why it was considered difficult to station a uniform price on a mobile phone. As per GST, the tax charges are all the same all over the globe. Therefore, it is easier to place a uniform price on the same. Currently, the GST price on any mobile phone is 18%. 

Below is the list of prices of a mobile phone before charging GST as opposed to its price after charging GST regime on the same:

Basis Before GST After- GST
Cost of manufacturing (a) 8,000 8,000
Excise duty charged @1% (b) 80
Base value for calculation of VAT (c) 8,080 8,000
VAT charged @14% or GST charged @ 18% (d) 1,131 1,440
Sale price set by a manufacturer to its retailer(e)= (a)+(b)+(c)+(d) 9,211 9,440
Value addition or packing charges (f) 500 500
Total value (g) = (c)+(f) 8,580 8,500
VAT charged @ 14% or GST charged @18% on the above value (h) 70(1,201-1,131) 90(1,530-1,440)
Total price 8,650 8,590

The above table is the application of GST that has reduced the prices of mobile phones because of the elimination of the concept of tax-on-tax. 

GST Applicable on Mobile Phones

GST has played a major role in the transformation of the Indian economic system by getting all goods & services under one single umbrella of the system. GST is to be paid on every mobile phone be it smartphone or feature. 

For instance, if you purchase a mobile phone from a store situated in the same territory where you live, then the CGST and SGST rates will be the same i.e. 9%. On the other hand, if you purchase a handset that is not in the same territory but outside then the IGST rate that the consumer will have to pay will be 18%. The best example for this case is an e-commerce seller. 

Composite supply as part of GST is a supply that consists of 2 or more goods or services that are organically packed as well as supplied in their ordinary business course. These items cannot be separately supplied to the end consumer. These are the principal supply, the GST rate of these will be taken into consideration when an invoice gets raised.  But if in case a charger and a USB is supplied along with your mobile phone, the GST charge will apply to the device along with the charger & USB.  Although, a few smartphones are also packed with a set of earphones that is not organically provided with the handset and therefore, it is established as a part of mixed supplies. 

GST Rates Applicable to Mobile Phones and Accessories

According to the GST regime, the price of a customer’s smartphone was not fixed, for the taxes used to vary from one state to another. But as per the GST system, the fixed rate is set at 18% all over the city. The GST rates levied on your smartphones and on their accessories is all balanced under HSN 85. 

Below is the list of GST rates on smartphones and their accessories:

Name of the Product HSN code GST rates
Mobile phones 8517 18%
Rechargeable batteries 8507 60 00 18%
Power bank 8507 18%
Memory card 8523 18%
Speakers, earphones, or headphones 8518 18%
Screen Protector (Plastic) 3919 18%
Screen Protector (Glass Tempered) 7007 18%
Parts of the manufacture of the Telephones for the cellular networks or other wireless networks 85 12%

Impact of GST on Import of Mobile Phones

Earlier, smartphones were excused from the 10% surcharge of social welfare. But when the union budget introduced the surcharge on social welfare, they were re-imposed on all the smartphones that were imported over & above 20% customs duty, which made them more expensive than that of locally found smartphones. 

IGST (For Value Goods) = Assessable VOG + Custom Duty + other charges on the duty of other goods as per the law. 

All of these together have made a huge impact on the prices of the mobile phones that have been imported into India.  

Impact of GST on Prices of Mobile Phones: Benefits and Unsolved Issues

The establishment of GST has managed to bring about a positive change in the culture of the country and especially with its uniformity. According to the concept under VAT, a mobile phone or a handset is taxed at 5% with an excise duty at 1%. In a few of the states, for example, Gujarat, the rates of tax were higher to 14%. Therefore, all individuals used to buy their preferred mobile phones from the dealers that they thought would set the price of the item low.  But even then, as per the guidelines of GST, the tax charged all over the city is set at 18%. Although, the increase in the rates of tax according to the guidelines of GST did make the purchase of a mobile phone a little bit costlier still it has managed to bring the advantage of eliminating the effect of cascading on taxes. 

GST Benefits to the Dealer of Smartphones 

The benefits of GST on mobile phones to the dealer are as follows:

  • Rise in Sales:

In today’s world one of the biggest necessities has turned out to be our mobile phones because of which every other is seen carrying one and therefore, the sale of these mobile phones has also been seen increasing day by day for the dealers that have GST registration

  • A Rise in Competition:

The uniform pricing and proper standard of tax rates have resulted in promoting healthy competition amongst the dealers dealing in the supply of mobile phones. 

  • Can’t Avail the online Benefits:

As per the regime for VAT, the e-commerce dealers have managed to bring in smartphones at a very low tax charge and then sell them in the states that have higher VAT as compared. However, the online pricing of the retail stores still tends to be lower but even then, the gap between the two has somehow reduced. Therefore, the establishment of GST under the taxation system has managed to make the process simple as well as hassle-free. 

You May Also Read

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GST Returns GST Bill
What is GST? GST Compensation
Types of GST GST Portal Login
GST Registration eWay Bill Registration
GST Invoice Composition Scheme Under GST
Input Tax Credit E Way Bill Login
Impact Of GST GSTIN Number

Frequently Asked Questions (FAQs)

What is the Current GST on Mobile Phones?

The current GST rate on mobile phones is set at 18%.

Does GST increase on mobile phones in 2022?

At present, the rate of GST on mobile phones is 18%. However, the Indian Cellular & Electronics Association has demanded to reduce the GST rate on mobile phones from 18% to 12%.

What are the benefits that the dealers of smartphones got?

The benefits that the dealers of smartphones got include a rise in sales, a rise in competition and no more online benefits.

What is the formula used for the calculation of IGST?

IGST (For Value Goods) = Assessable VOG + Custom Duty + other charges on the duty of other goods as per the law.

What is the value of supply to compute GST on mobile phones?

According to the system of GST, the value of supply is normally the money that is collected by the seller from the purchaser in order to sell their goods and services. And in the case of the related parties, the GST gets charged on the value of the transaction.

Tamanna Shivhare An exceptional writer who can connect with her writing is what Tamanna always wanted to be. The journey of writing was simply a step to present her best self and thoughts to the world.Tamanna has a knack for reading blogs and finding more ways in which she can improve and add magic to her writing.
Tamanna Shivhare An exceptional writer who can connect with her writing is what Tamanna always wanted to be. The journey of writing was simply a step to present her best self and thoughts to the world.Tamanna has a knack for reading blogs and finding more ways in which she can improve and add magic to her writing.
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