I-phone X is coming to India soon and preliminary exchange offers have already begun. Bring your old 5s to the store and leave with the glorious I-phone X. What a delight it would be to do away with the older and painfully slow smart phones in exchange for a shiny, new one.One packed with even more treats? The exchange is going to be more expensive than before.
Recently, we have seen mid-range phones getting cheaper and more loaded. But premium phones have become more expensive and sophisticated. Chinese manufacturers have entered the Indian market and are setting up local assembly plants. Foreign brands are bringing tough competition.
In the weeks leading up to GST implementation, people were apprehensive about the GST rates for mobile phones and other accessories. There were rumours that the GST rates for mobile phones would be as high as 18%.
Impact on smart phones & accessories
- Higher tax rate: Featured mobile phones are taxed at 12% under GST. Smart phones are taxed at 18%. Earlier, the VAT rate differed from state to state. The lowest was 5% in Karnataka and Tamil Nadu to a high of 14% in states like Delhi and Gujarat. Thus, the prices of mobile handsets have drastically risen in some states while people in other states are grinning from ear to ear.
- Taxed Exchange offers: To give a boost to sales, handset companies often come up with promotional exchange offers. This allows handset users to buy new smart phones against the older ones. They only have to pay the differential value. Earlier, the reduced amount was not taxable. But now, ‘barter’ is included in the definition of supply in the GST law. Hence, after GST roll out, even the reduced amount is taxable.
- Quicker Deliveries: Like every cloud has a silver lining, GST has brought some good effects too. E-Commerce companies can now freely deliver goods across the country. There will be no complaints of specific states not falling into the delivery zone. Even if the E-commerce companies do charge for deliveries, the shipping time is less.
- No more online benefits: In the pre-GST era, mobile phones available online had different prices than those sold in retail stores. This was due to the different VAT rates in different states. It was beneficial for online players. They purchased handsets from states where the VAT was lower and suppliedto consumers in states where VAT was higher. Online prices are still lesser than those in retail stores. But the gap has now reduced as a result of a uniform GST rate for mobile phones across all states.
For the aam janta which isn’t always careful with their gadgets, producers focusing on the sub Rs 10,000 sector is a blessing in disguise.