Mobile Phones to Get Expensive as Government Hikes GST Rates to 18%; Manufactures’ Body Disappointed

New Delhi: The Goods and Services Tax (GST) Council on Saturday increased GST rates on mobile phones and specified parts from 12 per cent to 18 per cent. The new rates will come into effect from next month, i.e, April 1, 2020. The announcement was made by Union Finance Minister Nirmala Sitharaman after the 39th meeting of state and Union Territory finance ministers in the national capital.

Reacting over the move, the India Cellular and Electronics Association (ICEA) said it would stymie consumption of mobile phones. “Consumption will be stymied 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 Rs 2 lakh crore,” Pankaj Mohindroo, ICEA Chairman said.

Earlier on March 12, in a letter to the Finance Minister, the ICEA had said the mobile handsets sector was in deep stress because of the supply chain disruption due to coronavirus outbreak. It was the most inappropriate time to consider GST hike on mobile phones, it asserted.

The industry body had also said the GST hike on mobile phone might adversely affect localisation of manufacturing as well as popularisation of the country’s digital payments objectives. According to ICEA, 31-32 crore Indians who buy phones in the country will be impacted by the move.

Meanwhile, the council also decided to slash GST on maintenance repair overhaul (MRO) services for aircraft to 5 per cent from 12 per cent while the tax rate on handmade and machine-made matchsticks has been rationalised to 12 per cent.

Sitharaman said the GST Council has asked Infosys to deploy more skilled manpower, increase capacity of hardware of GST Network to ensure that the system is glitch-free.

Finance Minister Nirmala Sitharaman: Late fees not to be levied for the delayed filing of the annual return & reconciliation statement for 2017-18 & 2018-19 for taxpayers with aggregate turnover less than Rs 2 Crores. https://t.co/IDuanp7ODC

— ANI (@ANI) March 14, 2020

Besides, the Council also decided to waive late fees for delayed filing of annual Income Tax returns for FY18-19 by entities with a turnover of less than Rs 2 crore. Moreover, delayed GST payments will attract interest on net tax liability from July 1.

(With agency inputs)