NEW DELHI :
Mobile phones could soon become costlier as the Good and Services Tax (GST) on cellular handsets will be increased to 18% from the current 12%. Earlier in the month, the GST Council had decided to increase tax rate by 6 percentage points on mobiles and certain components from April 1 due to the inverted duty structure.
Xiaomi had earlier indicated that it could hike prices. "As a result of this GST increase, all smartphone makers will be forced to increase prices. This can weaken the demand and mobile industry's Make in India program. This could also have long lasting impact on internet penetration and digital India program as majority of Indians access internet on smartphones," Manu Jain, Managing Director, Xiaomi India, had said.
Counterpoint Research Associate Director Tarun Pathak said, "This will impact the pricing and especially at a time when we are staring at uncertainty in the larger electronics supply chain due to coronavirus. An increase in price means a section of users will either go for second hand or even turn to grey market".
Chinese smartphone brand Realme had said said it would not pass on the GST hike to users with its new Narzo series as the company has decided to absorb the cost.
India Cellular & Electronics Association (ICEA) had approached Sitharaman against proposal to hike GST on mobile phone saying that it will be detrimental for consumer sentiments buying handsets and in turn impact local manufacturing of the devices.
ICEA had said that the industry is under deep stress because of disruption in the supply chain due to coronavirus and it is very inappropriate time to consider hike in GST rate of mobile phones from current level of 12 per cent.