Will GST Reforms Make Your Next Smartphone Cheaper?

Fast Summary

• GST Revamp Details: Effective from September 22, India’s revamped GST system will reduce tax slabs from four (5%, 12%, 18%, 28%) to two. A special slab of 40% is reserved for luxury items such as high-end cars, tobacco, and cigarettes.
• Impact on Daily Goods: Most personal use items will see lower tax rates aimed at boosting spending and economic growth.
• Mobile Phone GST Unchanged: Mobile phones remain taxed at 18% despite industry appeals to classify them under the essential goods category with a reduced rate of 5%.
• Industry Perspective (ICEA):

– Current GST rate on mobile phones deemed “regressive.”
– Pre-GST era VAT rates for mobile phones in most states capped at around 5%.- Domestic production of mobile phones grew significantly (from Rs. 18,900 crore in FY15 to Rs.Rs. 5.45 lakh crore in FY25),with exports exceeding Rs. 2 lakh crore.
– Urges lower domestic GST rates to increase affordability and stimulate demand further.

!New GST rate on mobile phones
Source: Agencies

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Indian Opinion Analysis

The simplification of India’s Goods and Services Tax system is a commendable step toward improving ease of compliance while attempting to revitalize economic activity by reducing overall taxes on consumer goods. However, the decision not to include mobile phones-critical tools for digital access-in the essential goods category warrants scrutiny.

While the domestic production sector has flourished under initiatives like Make in India, ICEA highlights that weakening demand within the home market could undermine long-term growth potential. The unchanged tax slab potentially impacts affordability and accessibility for consumers-a consideration that becomes notable given India’s push toward greater digital inclusion through platforms such as PM-WANI or e-governance services.

Maintaining neutrality between revenue objectives and developmental priorities requires careful balancing by policymakers going forward. Lowering the GST rate on mobiles could align fiscal policy better with broader socio-economic goals such as digital literacy expansion and tech penetration among rural populations.