GST, or Goods and Services Tax, is an indirect tax imposed on goods and services with the goal of unifying the Indian market. GST is applicable to various sectors, including mobile phones. In this article, we will discuss the benefits and drawbacks of GST on mobile phones.
Benefits of GST on Mobile phones
1. Elimination of cascading taxes: The biggest advantage of GST is that it eliminates the cascading effect of taxes. In the pre-GST era, the mobile phone industry was subject to multiple levels of taxes such as VAT, Central Excise Duty, and Service Tax. GST has removed this multiplicity of taxes, and now a single tax is levied on the phone.
2. Reduction in manufacturing cost: With the introduction of GST, the manufacturing cost of mobile phones has reduced. Earlier, manufacturers had to pay different taxes at different stages of production, but now, they have to pay a single tax on the value added.
3. Increased efficiency: The introduction of GST has streamlined the supply chain process, reduced paperwork, and increased the ease of doing business. This has, in turn, increased the efficiency of the mobile phone industry.
4. Boost to Make in India initiative: The reduction in manufacturing cost has provided a boost to the Make in India initiative. GST has made India a more attractive destination for foreign investment in the mobile phone industry.
Drawbacks of GST on Mobile phones
1. Increase in the cost of low-end phones: Although the GST has reduced the manufacturing cost of mobile phones, the cost of low-end phones has increased due to the imposition of 12% GST on them.
2. No reduction in the cost of high-end phones: The GST rate on high-end mobile phones has been increased from 12% to 18%. Consequently, there has been no reduction in the cost of high-end phones, and they continue to be expensive.
3. Impact on the unorganized sector: The mobile phone industry has a significant unorganized sector. The introduction of GST has affected this sector adversely. The compliance burden has increased and the sector has to pay taxes on a par with the organized sector, which is a challenge for the small players.
Conclusion
In conclusion, the benefits of GST on mobile phones outweigh the drawbacks. GST has reduced the multiplicity of taxes, streamlined the supply chain process, and boosted the Make in India initiative. However, the imposition of GST on low-end phones and high-end phones has had a mixed impact. Finally, it is essential to address the concerns of the unorganized sector in the mobile phone industry. In the long run, GST is expected to provide significant benefits to the mobile phone industry and the Indian economy as a whole.
(Note: Do you have knowledge or insights to share? Unlock new opportunities and expand your reach by joining our authors team. Click Registration to join us and share your expertise with our readers.)
Speech tips:
Please note that any statements involving politics will not be approved.