Mobile phones will become costlier as GST Council hikes rates

Mobile phones will become costlier from April 1 as the GST Council headed by Finance Minister Nirmala Sitharaman on Saturday decided to raise GST levy on it to 18% from the existing 12%.

The move came in for an immediate criticism with the apex body of moble phose and electronics ICEA saying it was the most inappropriate time to consider the hike when entire supply chain has been disrupted by the COVID-19 outbreak.

It said any change in GST rate will be detrimental to the government's flagship “Make in India” initiative.

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It will also hinder mobile penetration in the country and slowdown digital drive, the industry said.

The finance minister, however, said that the move will benefit the industry, which is suffering from inverted GST structure, a phenomenon where taxes on raw material is higher than that of finished products.

Officials, howevr, said that the government was losing close to Rs 25,000 crore every year on the account of duty refund on certain taxes already paid on various goods including mobile phones and parts. They said more inverted duty correction will come in the near future.

GST on handmade, machine-made matchsticks has also been raised to 12% while GST on maintenance repair overhaul services of aircraft cut to 5% from 18%.

The Council also decided to slash GST on maintenance repair overhaul (MRO) services for aircraft to 5% from 12%.

The Council to waive late fee for delayed filing of annual returns for the financial year 2018 and 2019 by entities with a turnover of less than Rs 2 crore.

The minister also said that interest will be levied on net tax liability from July 1 for delayed GST payments.

The council also asked Infosys, which has designed the GST network system, to provide a better groomed GSTN system by July this year.

Infosys chairman Nandan Nilekani gave a presentation on how he proposes to streamline GSTN.