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GST

New GST Rates For Mobile Phones, Smartphones And Accessories

In this article, we provide a detailed overview of how GST applies to electronics, specifically smartphones and accessories, shedding light on the current tax rates and industry dynamics.

In the ever-evolving landscape of taxation in India, the Goods and Services Tax (GST) has emerged as a game-changer. Designed to streamline the taxation system, GST impacts various sectors, including the booming mobile phone industry. In this comprehensive guide, we delve into the current GST rates for mobile phones and their accessories.

Present Scenario GST Rates

In the present-day scenario, where smartphones have become an indispensable part of our lives, understanding the GST rates for mobile phones and accessories is crucial. Currently, under the Goods and Services Tax, most commodities sold in India fall under a simplified tax bracket, making calculations more straightforward and payments more convenient.

Mobile phones and their accessories are not exempt from the GST regime. As of now, the GST rate on mobile phones, regardless of whether they are smartphones or feature phones, stands at 12%. On the other hand, the GST rate on mobile electronic accessories is slightly higher at 18%.

The Evolution from VAT to GST

Before the implementation of GST, Value Added Tax (VAT) was the primary form of taxation on mobile phones. However, the challenge arose as VAT rates varied from state to state, making it difficult to establish a standard price for phones. 

With the advent of GST, a uniform tax rate has been applied across the entire country, bringing much-needed consistency to the Indian market. This standardization has contributed to the current GST rate of 12% on mobile phones, under the Harmonized System of Nomenclature (HSN) code 8517.

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Inter and Intra State of GST rates

When purchasing a new phone, consumers are subject to a 12% GST. If the purchase is made from a dealer within the same state, the GST is divided into State GST (SGST) and Central GST (CGST), both applied at 6%. Conversely, if the phone is bought from a dealer residing in another state or is a foreign/migratory dealer, Integrated GST (IGST) at the rate of 12% is applicable. This scenario also applies when importing phones from abroad.

HSN Codes

HSN codes, or Harmonized System of Nomenclature codes, play a vital role in correctly filing invoices. For mobile phones and accessories falling under Chapter 85, specific HSN codes determine the applicable tax rates. 

Here’s a breakdown of HSN codes and GST rates for commonly bought and used mobile commodities:

ITEM HSN CODE GST RATE
Smartphones and Feature Phones 8517 12%
Charger 8504 28%
Earphone 8518 18%
Battery 8506 28%
Power Bank 8504 28%
Leather Phone Case & Back Cover 4202 28%
Memory Card 8523 18%
USB Cable 8504 28%
Headphones 8518 18%
Plastic Screen Protector 3919 18%
Tempered Glass Screen Protector 3923 18%
Speakers 8518 18%

Note – The GST rate on mobile accessories is 18% and varies slightly according to the specific product. Since mobile phones use wireless networks, they fall under Chapter 85 of the GST schedule.

GST Battery Issue

A noteworthy issue arose concerning the GST on lithium-ion batteries used in mobile phone manufacturing. Indian phone manufacturers advocated for a reduction in GST on these batteries from 28% to 12%. The plea was rooted in the argument that these batteries are integral components in phone production and should be taxed at the same rate as other phone parts, i.e., 12%. The industry asserted that the current GST structure, including State GST (SGST), Integrated GST (IGST), and Union GST (UGST), complicates the supply chain and poses challenges for low-scale production viability.

The Indian Cellular Association emphasized that the 12% GST on parts used in mobile manufacturing covers batteries as they are inserted into the mobile. This adjustment, if implemented, would not only streamline the production process but also benefit manufacturers.

Government’s Response and GST Rates Reduction

In response to industry pleas and recognizing the need for alignment, the government reduced GST rates for around 50 items, including washing machines and mobile accessories. This move was a welcome change for electric companies, who committed to passing on the benefits to consumers through reduced prices. 

For instance, Samsung India’s Senior Vice President, Rajeev Bhutani, affirmed the company’s commitment to extending the full benefit of the 7.81% GST rate reduction to consumers. This reduction also positively impacted the mobile phone industry by lowering taxes on essential components like lithium-ion batteries.

Conclusion

The implementation of GST has been a transformative step in simplifying the tax landscape for mobile phones and accessories in India. By bringing uniformity to tax rates, the government aims to foster transparency, streamline the supply chain, and ultimately benefit consumers. As the GST regime evolves, it’s essential for businesses and consumers alike to stay informed about the latest updates and leverage the advantages offered by this unified tax structure. 

For more detailed and personalized information, individuals and businesses are encouraged to seek professional advice from the experts at Vakilsearch.

FAQs

What Is the Validity of a GST Certificate?

The GST certificate, once issued, is valid until it is cancelled, surrendered or suspended.


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