The Goods and Services Tax (GST) regime, which came into effect in 2017, is now an integral part of the Indian taxation system. Today, the final cost of almost every product and service is calculated after accounting for GST. The list of such products and services also includes mobile phones. With the sale of mobile phones increasing everyday, the implementation of GST on smartphones affects a large population. Read on to know more about the GST rates which are applicable on the mobile phones of today.
Prior to the implementation of GST on services and products, value-added tax (VAT) and excise duty were levied on cell phones. However, there was a discrepancy in the rates which were charged across states back then, making it difficult to set a uniform price. The implementation of the GST regime changed all of that; now, a standard GST tax rate is levied on mobile phones all over the country. Currently, the GST on mobile phones across India is 18%.
Until April 1, 2020, the applicable GST rate on mobile phones and accessories was 12%; it was later revised to 18%. This revision was made at the 39th GST Council meeting. Post which, mobile phones began attracting 18% GST rate, irrespective of the state it was purchased from. Here is a table that you can follow to know the Harmonised System of Nomenclature (HSN) code of mobile phones and accessories as per the GST council, along with GST rates.
Product/Commodity |
HSN Code |
GST Rate |
Mobile phones |
8517 |
18% |
Power bank |
8507 |
18% |
Tempered glass screen protector |
7007 |
18% |
Memory card |
8523 |
18% |
Lithium-ion batteries |
8507 600 |
18% |
Headphones, Earphones, Speakers |
8513 |
18% |
USB Cable |
8504 |
28% |
The cost of imported mobile phones is much higher with the introduction of GST. Prior to the GST era, imported mobile phones were exempt from the 10% cost levied as a social welfare surcharge, which was reimposed during the 2020 Union Budget. The charges in question are levied over and above the 20% basic customs duty.
As of now, the cost of imported mobile phones is calculated by adding the assessable value of goods to the basic customs duty and the other chargeable duty on the goods. As a result, the cost of imported mobile phones is usually higher than those produced locally, courtesy of GST.
Dealers tend to widely offer different types of discounts and exchange offers on mobiles phones which are either sold online or through a physical store. Read on to understand how the GST regime affects the exchange and discount offers on mobile phones.
An exchange offer typically implies a trade-up of one’s old phone. The customer can avail a new handset in exchange for the old one by paying the difference between the old handset’s resale value and the cost of the new device. During the VAT regime, this difference sum was not taxable. However, since the implementation of the GST system, the barter of mobile phones is categorised as a supply. As such, the reduced price becomes taxable as well.
To illustrate, let us assume that an individual buys a phone worth ₹30,000 for ₹25,000 if they trade in their old phone. However, as per the GST provisions, the tax will be calculated on the full amount of ₹30,000.
Promotional discounts tend to be a big part of the smartphone industry. As part of the GST regime, discounts are excluded when calculating the tax that is payable. However, this only holds true when the discounts are reflected in the invoice. Another condition that must be met is the reversal of the input tax credit (ITC) on the discount received as per the credit note.
The implementation of GST on mobile phones has indeed brought uniformity in the maximum retail price (MRP) of the product all across the country. During the VAT regime, certain states used to charge a lower rate of tax than others. For example, prior to the GST era, Gujarat charged a VAT of 14% on mobile phones. This forced a large number of consumers to look for dealers elsewhere to buy the product at a cheaper cost.
In the GST era, the cost may be a bit higher than before but the uniformity reduces the risk of cascading effect on taxes. As a result, an individual will pay the same price as any other Indian resident for the same phone. The GST regime has made the taxation system simple and straight-forward. In order to learn more about GST and its implication on other kinds of goods and services, you can visit Finserv MARKETS!
The HSN code applicable on mobile phones is 8517.
The applicable GST on mobile accessories is 18%.
GST encourages healthy competition among smartphone dealers while increasing sales. It also reduces the fraudulent sale of smartphones that online dealers used to previously source from the states at lower tax rates.