GST on Mobile Phones

The GST on mobile phones is set at 18%, covering smartphones, feature phones, Android tablets, and iPads, effective from April 1, 2020. This uniform rate applies across all states, streamlining the taxation process compared to the earlier Value Added Tax (VAT) system.

For example, if a mobile phone costs ₹15,000, the GST amount would be 18% of the price, which is ₹2,700. So, the total cost of the phone would be ₹17,700.

GST Rate on Mobile Accessories with HSN Code

The GST rate on mobile accessories is 18%, categorized under distinct HSN codes. Below is a table detailing the GST rates along with corresponding HSN codes for mobile devices and their accessories.

Item

HSN CODE

GST RATE

GST on Mobile Phones 8517 18%
GST on Charger 8504 28%
GST on Battery 8506 28%
GST on Power Bank 8504 28%
GST on Leather Phone Case & Back Cover 4202 28%
GST on Memory Card 8523 18%
GST on USB Cable 8504 28%
GST on Earphone, Headphones and Speakers 8518 18%
GST on Plastic Screen Protector 3919 18%
GST on Tempered Glass Screen Protector 3923 18%

 

Related Read: GST HSN Code List

GST on Mobile Phone Repair Services and Spare Parts

Mobile phone repair services are subject to an 18% GST rate, which covers labor charges for repairing the device.

For spare parts used in repairs, such as display screens, headphone jacks, batteries, and internal components, the applicable GST rate is generally 18%. Repair shops can also claim Input Tax Credit (ITC) on the purchase of these parts, helping offset their overall tax liability.

GST Calculation on Mobile Phones

GST on mobile is calculated by multiplying the tax rate by the price of the mobile phone.

Formula to Calculate Mobile GST Rate:

GST amount = (Price of product × GST rate) / 100

For instance, if a mobile phone costs ₹25,000, the GST at 18% would be ₹4,500 (18% of ₹25,000).

Using this formula, you can calculate the GST on any mobile phone by entering its price and the applicable tax rate.

When are SGST, CGST, and IGST Applicable on Mobile?

When purchasing a mobile phone, the application of GST—comprising SGST, CGST, or IGST— are based on the location of the buyer and seller:

Intra-state Purchase

If a customer buys a mobile within the same state, the 18% GST rate is divided equally into State GST (SGST) and Central GST (CGST). For example, with a mobile phone priced at ₹20,000:

  • SGST (9%): ₹1,800
  • CGST (9%): ₹1,800
  • Total Price: ₹20,000 + ₹1,800 (SGST) + ₹1,800 (CGST) = ₹23,600

Inter-state Purchase

If a customer buys a mobile phone from a dealer in another state, Integrated GST (IGST) is applicable. The entire 18% GST is charged as IGST. For example, for a ₹20,000 mobile phone purchased from Maharashtra by a customer in Karnataka:

  • IGST (18%): ₹3,600
  • Total Price: ₹20,000 + ₹3,600 (IGST) = ₹23,600

To stay updated on any changes to the GST rate on mobile phones, you can follow announcements from the GST Council, the Ministry of Finance, and other reliable news sources. 

Related Read: What is CGST, SGST, IGST, and UTGST?

How is the Value of Supply Calculated for GST on Mobile Phones?

Value of Supply: Under GST, the value of supply is the total amount collected by the seller from the buyer for the goods or services. When dealing with related parties, GST is charged based on the transaction value, which refers to the price at which unrelated parties would typically transact in the ordinary course of business.

Exchange Offers: When smartphones are sold with exchange offers, where customers trade in old devices for new ones, GST is charged on the full value of the new phone, not just the reduced amount. For example, if a new phone is sold for ₹25,000 but the customer pays ₹20,000 due to an exchange, GST will still be calculated on ₹25,000.

Exclusion of Discounts: Trade discounts or quantity discounts reflected on the invoice are excluded from the taxable value of supply, provided the following conditions are met:

  1. The discount is mentioned on the invoice.
  2. Input Tax Credit (ITC) is reversed on the discount received through a credit note.

Impact of GST on Mobile Phone Prices

The shift from the old tax regime (VAT) to GST has significantly impacted mobile phone prices. Here are some key changes:

Latest Updates on GST and Import Duties for Mobile Phones

In the Union Budget 2024 held on 23rd July 2024, the Finance Minister announced a reduction in the customs duty on the import of mobile phones and related components by 5%. This move aims to boost the domestic manufacturing industry and make mobile phones more affordable. These changes will come into force once notified by the CBIC.

Particulars Old Rate New Rate
Cellular Mobile Phone 20% 15%
Charger/Adapter of Cellular Mobile Phone 20% 15%
Printed Circuit Board Assembly (PCBA) of Cellular Mobile Phone 20% 15%

Pre-GST Vs. Post-GST Prices

Particulars Pre-GST Post-GST
Cost of manufacturing (a) 10,000 10,000
Excise duty @1% (b) 100
Base value for VAT calculation (c) 10,100 10,000
VAT @14%/GST @ 18% (d) 1,414 1,800
Sale price quoted by manufacturer to retailer (e) = (a) + (b) + (c) + (d) 11,514 11,800
Value addition/packing charges (f) 600 600
Total value (g) = (c) + (f) 10,700 10,600
VAT @ 14%/GST @ 18% on above (f) value 84 (1,498 – 1,414) 108 (1,908 – 1,800)
Total price 10,784 10,708

Impact on Different Price Segments

  • Budget Smartphones: The 18% GST rate led to a slight increase in prices for budget models, such as those from brands like Realme, Redmi, and Poco impacting affordability for price-sensitive consumers.
  • Mid-Range Smartphones: This segment experienced a relatively neutral impact, with price adjustments varying across brands.  Brands like Samsung, OnePlus, and Vivo fall into this category.
  • Premium Smartphones: High-end devices were less affected by the GST rate due to their overall pricing. Brands like Apple, Samsung (flagship models such as Galaxy S24 series), Google Pixel and OnePlus premium series are examples.

Can ITC Be Claimed on Mobile Phones?

Yes, Input tax Credit (ITC) can be claimed on mobile phones under certain conditions. Businesses can claim ITC on mobile phones purchased for business use, provided they have a valid tax invoice and the phone is used for business purposes. However, personal use or employee benefits do not qualify for ITC. Proper GST-compliant invoices and documentation are required to claim ITC, ensuring the supplier’s GSTIN, invoice details, and compliance with GST rules.

How Smartphones Dealers Benefit from GST?

The implementation of GST and new GST slab rates has brought several advantages to mobile phone dealers:

  • Simplified Tax Structure: The uniform 18% GST rate across India under HSN code 8517 replaced the complex VAT system, reducing compliance burdens and operational complexities.
  • Input Tax Credit (ITC): Dealers can claim ITC on inputs like rent, electricity, and transportation, improving cash flow.
  • Reduced Paperwork: GST’s digital processes and reduced documentation requirements have streamlined operations.
  • Enhanced Consumer Confidence: A uniform pricing structure across states has boosted consumer trust and increased sales.
  • Supply Chain Efficiency: GST has improved supply chain management by eliminating inter-state check-posts and reducing transit time.

GST Compliance Challenges for Mobile Phone Retailers in India

Mobile phone retailers face several compliance challenges under the GST regime, impacting invoicing, tax credits, returns, and overall business operations:

  • Invoicing Requirements: Retailers must issue GST-compliant invoices that include details such as GSTIN, itemized prices, and applicable taxes. Failure to meet these requirements can lead to penalties.
  • Input Tax Credit (ITC) Reconciliation: Proper reconciliation of ITC is crucial to claim credits accurately. Retailers must reconcile purchases with GST invoices received from suppliers to avoid discrepancies.
  • GST Return Filing: Retailers must file GST returns on time, detailing sales, purchases, and tax liabilities. Delayed or incorrect filings can result in penalties and interest charges.
  • Challenges with Bundled Offers: Invoicing for bundled offers or discounts, common in the mobile phone sector, requires clear segregation of individual components for correct tax calculation.
  • Handling Returns, Exchanges, and Warranties: GST implications vary for returns, exchanges, and warranties. Proper documentation and adjustment of tax credits are necessary to comply with GST regulations.
  • Impact on Inventory and Accounting: GST affects inventory management and accounting practices due to changes in tax rates, credits, and compliance requirements. Retailers must maintain accurate records and update systems accordingly.

Also Read:

Frequently Asked Questions

1. What is the GST Rate on Imported Mobile Phones?

The GST rate on imported mobile phones and their components is 18%. However, the overall cost of imported phones is influenced by various factors such as custom duty, import duty on components, and IGST.

2. What is the difference between GST and the old tax regime for mobile phones?

Under the old tax regime, mobile phones were subject to VAT and excise duty, which varied across states. GST has replaced these taxes with a uniform rate of 18%.

3. What is the GST on an iPhone?

The GST on an iPhone, like other mobile phones, is set at 18% in India. This rate applies uniformly to both smartphones and feature phones.

4. What is the GST on smartphones?

The GST on smartphones is set at 18% in India.

5. Is there GST on mobile phone accessories?

Yes, mobile phone accessories are subject to 18% GST.

6. How to Save GST on Mobile phones while buying?

To save on GST, buy your mobile phone from authorised sellers who provide GST invoices. If purchasing for business purposes, this allows you to claim Input Tax Credit (ITC)

7. Is GST applicable on second-hand mobile phones?

Yes, GST applies to the sale of second-hand mobile phones in India. The applicable rate is the same as for new mobile phones, currently set at 18%.

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