GST reform: Will it make smartphones cheaper? Here’s how the phone prices may get affected

GST

As India prepares for its upcoming Goods and Services Tax (GST) reforms, the mobile phone industry is pushing for a major change that could impact buyers directly. The India Cellular & Electronics Association (ICEA) has urged the government to reduce GST on mobile phones from 18% to 5%.

The argument

Well, there's no denying the fact that smartphones are important and have become an integral part of our daily lives. Exactly that, India Cellular & Electronics Association has argued about with government.

The fact that phones are no longer luxury items but essential tools of digital access.

What's current GST structure?

At present, mobile phones attract 18% GST, a rate that was increased from 12% in 2020. Before the GST era, most states levied around 5% value-added tax (VAT) on phones, treating them as necessary goods. ICEA has called the current 18% slab “regressive,” pointing out that it makes smartphones less affordable for the country’s 90 crore mobile users.

Industry’s case for lower GST

ICEA Chairman Pankaj Mohindroo stated that mobile phones should be taxed at 5% in line with Prime Minister Narendra Modi’s vision of creating a $500 billion electronics ecosystem. The body argues that smartphones are central to India’s digital economy, and lowering taxes will help expand access, especially among lower-income groups.

What lower GST could mean for buyers

If smartphones move into the 5% GST slab, buyers could see a significant drop in prices. For example, a phone priced at Rs 20,000 today has Rs 3,600 in GST. At 5%, the tax would reduce to just Rs 1,000, potentially lowering the effective price by over Rs 2,500.

Now, that's something buyers will benefit from as the phones will become more affordable across the price bracket, if 5% GST goes through.