Mobile phones have become a ubiquitous item in today’s world. They have become an essential component of our daily lives, and there is hardly anyone who does not own a smartphone. Apart from being a communication tool, mobile phones have now become a source of entertainment, education, and commerce. The growth of the mobile phone industry in India has been exponential, yet the recent implementation of GST has raised some concerns over its impact on the budget of mobile phone purchasers.
The implementation of GST on mobile phones has significantly affected the prices of smartphones. Prior to the introduction of GST, mobile phones were taxed at a rate of 5-7.5%, but after the introduction of GST, there is a uniform rate of 18%. This has led to an increase in the price of smartphones. According to industry experts, the impact may be felt most by those who buy smartphones in the mid-range segment.
The mobile phone industry has seen a shift in consumer behaviour, with customers primarily opting for smartphones in the mid-range segment, which usually range between Rs. 10,000 to 20,000. With the increase in tax rate, the prices of these phones may see a considerable rise, putting them beyond the reach of many buyers. This may have a significant impact on the sales of mid-range phones, which account for most of the sales in the Indian market.
The new GST rate has also affected the telecom sector. The telecom industry has been already struggling with the tariff wars and the problem of predatory pricing by a few companies in the market. With the new GST rate, telecom operators may have to face a substantial financial burden, as they will have to bear the brunt of additional input tax credit, thereby increasing the cost of providing services to the consumers.
The negative effect on the budget of the consumers could have a domino effect on the economy as a whole. As the GST rate is likely to increase smartphone prices, it could lead to a decrease in demand for smartphones, which, in turn, could impact the revenue of the mobile phone companies. The decrease in sales could impact the employment of thousands of people employed in the industry.
To conclude, GST implementation on mobile phones may have adverse effects on the budget of consumers. The increase in prices could lead to a decrease in demand for smartphones, in turn leading to a dip in the revenue of mobile phone companies and the economy as a whole. Therefore it is important for the government to consider the impact of GST on the mobile phone industry and provide the necessary support to the industry to avoid any further damage.
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