The introduction of the Goods and Services Tax (GST) in India marked a significant change in the country's tax system. It brought several items under its ambit, including mobile phones. However, many people are still unclear about how GST affects the cost of mobile phones and how it is calculated. In this article, we will take a closer look at GST for mobile phones and everything you need to know about it.
What is GST?
GST stands for Goods and Services Tax, which is a new tax regime introduced in India in 2017. It subsumed all indirect taxes and brought them under one umbrella. GST is a consumption tax that is levied on the value of goods and services consumed in India.
The tax is collected at every stage of the supply chain, from production to distribution to the final consumer. When a product or service is sold, the GST is added to the price of the item, and the seller remits the tax to the government.
GST rates on mobile phones
The GST rate on mobile phones in India is 18%. This means that an additional 18% tax is added to the price of the phone.
For example, if a mobile phone costs Rs. 20,000, the GST amount will be 18% of the price, i.e., ₹3,600. So, the final price of the phone will be Rs. 20,000 + Rs. 3,600 = Rs. 23,600.
GST calculation on mobile phones
GST is calculated by multiplying the tax rate with the price of the mobile phone. In the example above, we calculated that the GST on a mobile phone that costs Rs. 20,000 would be Rs. 3,600 (18% of the price).
The formula to calculate GST: GST amount = (Price of product x GST rate) / 100
So, applying this formula, we can calculate the GST on any mobile phone based on its price and the applicable tax rate.
What is the impact of GST on mobile phones and accessories?
The impact of GST on mobile phones and accessories has been mixed. While the GST on mobile phones and accessories has been reduced from 12% to 18%, some manufacturers increased the prices of their products to offset the increased input costs. However, the overall impact has been positive, leading to increased compliance and growth in the mobile phone and accessories market. If you're a business dealing with mobile phones, understanding GSTR 1 and its filing procedure is crucial for staying compliant.
How does GST affect the cost of mobile phones?
Before the implementation of GST in India, mobile phones incurred various taxes such as excise duty and varying VAT rates across states. This led to complexities in pricing, with different prices in different regions due to the tax structure. For instance, a mobile phone costing Rs. 10,600 before GST included excise duty, VAT, and other charges, resulting in a final sale price of Rs. 10,684.
Post-GST, the tax system streamlined with a uniform rate of 18%, eliminating cascading taxes and the tax-on-tax effect. This simplification has led to a more consistent pricing structure nationwide. For example, a mobile phone with the same manufacturing cost of Rs. 10,000 now incurs GST, resulting in a total price of Rs. 10,605, which reflects the reduced complexity and potentially lower costs for consumers due to the elimination of multiple taxes.
Understanding how GST affects the cost of mobile phones is essential to make an informed buying decision. By comparing prices and taking tax into account, you can choose the best deal on your mobile phone purchase. It is also essential to keep in mind that GST rates may change in the future, so staying informed is crucial. If you are a business owner looking to register for GST, ensure that you have all the necessary GST registration documents ready before applying.
GST on mobile phones – Types of GST applicable
HGST has changed how taxes work in India by combining them into one system. It applies to all mobile phones, whether they are smartphones or basic models, without any exceptions.
What is the GST rate on mobile phones?
Under the pre-GST system, smartphone prices fluctuated due to varying state taxes. With GST's implementation, a uniform rate of 18% applies nationwide to mobile phones, categorized under HSN code 8517. Here's a simplified table summarising GST rates for mobile phones and related accessories:
HSN code |
Product name |
GST rate |
8517 |
Mobile phones |
18% |
8518 |
Speakers, headphones, earphones |
18% |
8507 60 00 |
Lithium-ion batteries |
18% |
8507 |
Power bank |
18% |
8523 |
Memory card |
18% |
7007 |
Tempered glass screen protector |
18% |
3919 |
Plastic screen protector |
18% |
85 |
Parts for the manufacture of cellular networks |
12% |
These rates ensure consistency in taxation across India, simplifying the pricing structure for consumers and manufacturers alike. To ensure accurate GST filing and registration, businesses should refer to the GST state code list for the correct state codes.
GST on import of mobile phones
In recent developments, Budget 2023 eliminated customs duties on camera lenses and components crucial for manufacturing cellular mobile phones, previously taxed at 2.5%. Additionally, the exemption on lithium-ion cells used in mobile phone batteries was extended until March 31, 2024. However, Budget 2020 reintroduced a 10% social welfare surcharge on imported mobile handsets, in addition to the existing 20% basic customs duty. This has increased the cost of imported mobile phones in India, with IGST applied on the assessable value comprising customs duties and other applicable charges, further impacting their pricing dynamics in the market.
Can ITC be claimed on mobile phones?
Input tax credit (ITC) on mobile phones can be claimed under GST if they are purchased for business purposes. The invoice must include details such as the company's name, address, GSTIN, HSN code of the mobile phone, and the GST amount charged. It's essential that the mobile phone is received by the recipient, the supplier files their GST returns, and pays the tax to the government. Adhering to these guidelines is crucial for businesses seeking to claim ITC on their mobile phone purchases.
Explore more related articles on GST
| Eway Bill | ||
