Despite the fact that all Chinese smartphone makers are launching devices in India, the government has increased the GST rates. The government has raised the tax slab to 18 percent from 12 percent. This means the smartphones will get costlier, and buyers will have to shell out more money from their pockets.

GST Rate Hike: Smartphones Might Get Costlier

“Mobile phones and specified parts to attract 18 percent versus 12 percent. All other items, if there’s a need to calibrate the rates, to remove the inversion, we can take them up at future, the examination of that can happen at a later time,” said finance minister Nirmala Sitharaman.

GST Hike Might Lead Job Loss In The Smartphone Industry

The industry body ICEA has issued a statement and said that it would lead to job losses and will burden the sector. The firm said that it will affect 100 crore consumers.

“When coronavirus is spreading panic, an economic slowdown is at its peak, consumer sentiment is battered and stock markets are in free-fall, increasing GST is both counter-intuitive and insensitive. This will lead to immediate job losses and severely dampen future investments in manufacturing,” ICEA Chairman Pankaj Mohindroo said in a statement.

Furthermore, the firm pointed out that the customers used to pay 4 to 5 percent value-added tax and 1 percent excise duty until 2017. Now, they are paying 12 percent GST which is going to increase to 18 percent.

Meanwhile, Vivo director of brand strategy Nipun Marya said that they will decide in the next few weeks, as they are estimating the impact. It is worth mentioning that Xiaomi, Realme, Oppo, Vivo, and OnePlus are leading the smartphone industry they are not receiving good profits from the Indian market. The 18 percent GST on devices will force the smartphone makers to pass the burden on buyers. However, so far there is no announcement from the companies on the hike.

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