GST On Mobiles Increased By 50%; Xiaomi Requests PM Modi To ‘Reconsider’, Else Entire Industry Will ‘Crumble’
The GST (Goods and Services Tax) Council has decided to increase the levy of tax on mobile phones and specific parts from 12% to 18%. The smartphone industry in India is already starting to oppose this decision by the government.
“All other items, if there’s a need to calibrate the rates, to remove the inversion, we can take them up at future, examination of that can happen at a later time”, said the FM Nirmala Sitharaman after conclusion of the 39th GST Council meeting on Saturday.
GST on Mobile Phones Increase by 6%
Mobile phones will attract an 18% goods and services tax (GST) rate from April 1, 2020, up from existing 12%, after the GST Council corrected the inverted duty structure that was being faced by the industry.
The council gave relief to domestic maintenance, repair and overhaul (MRO) service providers. Sitharama said it was decided to reduce the GST rate on MRO services in respect of aircraft from 18% to 5% with full ITC (input tax credit) and to change the place of supply for B2B MRO services to the location of the recipient.
Taxpayers with over Rs 5 crore annual turnovers will have to file for GST mandatorily. Earlier, the turnover limit was Rs 2 crores.
The council has decided to not hike rates of fertilisers and footwear given the current economic scenario and effects of the coronavirus outbreak.
Also, about the glitches on the GST network, Infosys founder Nandan Nilekani has proposed a plan to overhaul the GSTN to identify glitches. He promised that all changes would be accommodated and all glitches would be sorted out by July 2020, instead of January 2021.
What Do Officials Think of the GST Hike?
The smartphone industry in India is already starting to oppose the government’s decision to increase the goods and service tax (GST) on mobile phones and some components.
Manu Jain, Managing Director, Xiaomi India tweeted that this 6% hike in the GST will crumble the industry. He commented that already due to Covid-19, the smartphone industry is struggling to prosper.
#GST increase for phones from 12% to 18% will crumble the industry.— Manu Kumar Jain (@manukumarjain) March 14, 2020
Smartphone industry is already struggling with profitability due to depreciating INR vs US$.
Everyone will be forced to increase prices. This will further weaken mobile industry's #MakeInIndia program.
Also, as the Indian rupee is depreciating against the US dollar, everyone will be forced to increase prices. This will further weaken the mobile industry’s Make In India program.
At least all devices under $200 (approximately ?15,000) must be exempted from this.
Pankaj Mahindroo, Chairman of the Indian Cellular Association called the move “extremely detrimental to the vision of Digital India”.
He believes that consumption will be hampered and our domestic consumption target of $80 billion (Rs. 6 lakh crore) by 2025 will not be achieved. We will fall short by at least ?2 lakh crore.
sellers in India have already been struggling to keep supplies up due to
shutdowns in China caused by the novel coronavirus pandemic.