The Goods and Services Tax (GST) Council, in its 56th meeting, unveiled a revamped GST structure, introducing a simplified two-tier tax system with slabs of 5 percent and 18 percent, alongside a new 40 percent 'sin/luxury' slab for premium goods. As consumers gear up for the festive season, many are eager to know whether this tax overhaul will make smartphones more affordable. The answer, unfortunately, is no - smartphone prices are set to remain unchanged.
The GST rate on mobile phones continues to be 18 percent, consistent with the previous structure, as confirmed by multiple sources, including industry experts and the GST Council's announcements. Smartphone manufacturers had anticipated this outcome, noting that a reduction to the 5 percent slab was unlikely given the significant revenue smartphones generate for the government. However, some industry experts argue that smartphones 'are a necessity now' and should be included in the 5 percent bracket.
Despite hopes for a future reduction, the GST Council's focus was on rationalizing taxes for other essential and consumer goods, leaving smartphones untouched.
The new GST structure, effective from September 22, replaces the earlier four-tier system (5 percent, 12 percent, 18 percent, and 28 percent) and eliminates the cess on certain items. Finance Minister Nirmala Sitharaman emphasised that the reforms aim to ease the tax burden on the common person and boost consumption ahead of festivals like Diwali and Navaratri. While smartphones remain at 18 percent, other consumer electronics have seen significant tax cuts, offering relief to buyers.
For instance, large-screen TVs (above 32-inches), air conditioners, washing machines, and refrigerators have had their GST reduced from 28 percent to 18 percent. This change is expected to lower the prices of these products, with air conditioners potentially becoming Rs. 1,500 to Rs. 2,500 cheaper, depending on the model. Smaller TVs (32-inches) now fall under the 5 percent slab, making them even more affordable.
Dishwashing machines also benefit from the 28 percent to 18 percent reduction, encouraging purchases during the festive season. These cuts are seen as a boon for the consumer electronics industry, with experts predicting a surge in demand.
The GST Council’s reforms also extend beyond electronics, slashing taxes on household essentials like hair oil, toothpaste, and kitchenware to 5 percent and exempting GST on life-saving drugs and individual insurance policies. While these changes signal a consumer-friendly approach, smartphone buyers will have to wait longer for any price relief.
