While we have been discussing the recent price hikes being announced on several smartphones due to the rise in component costs, even phones priced under INR 25K have now started becoming out of reach for normal customers. Well, a new whitepaper prepared jointly by Grant Thornton Bharat and Policy Watch India Foundation has now called for a re-examination of the Goods and Services Tax (GST) framework for affordable smartphones.
The report argues that the current uniform 18% GST on smartphones no longer reflects the evolving role of smartphones in India’s digital economy.
Read more about it below.
New Whitepaper Calls for GST Relief on Smartphones Priced Under INR 25K
As per the newly released whitepaper, the government should consider bringing tax relief for smartphones priced under INR 25K. Currently, all smartphones are subjected to 18% GST, irrespective of their pricing. However, the report suggests that smartphones under the INR 25K segment should be brought under the 5% GST tax slab.
Speaking more, the report highlights that this move “would improve affordability for first-time buyers and price-sensitive consumers while supporting the government’s objectives of Digital India, financial inclusion and electronics manufacturing.” It further adds that smartphones priced above the INR 25K segment should continue to remain under the existing 18% GST slab.
The report also mentions that the sub-INR 25K smartphone segment caters to around two-thirds of Indian smartphone shipments. This segment primarily serves first-time buyers, rural households, women, students, and lower-income consumers. The GT Bharat-PWIF study also adds that nearly 35 crore Indians continue to use feature phones, suggesting that affordability still remains a significant barrier to wider digital participation in the country.
To add, the report points out that countries such as Vietnam, Thailand, Indonesia, and Malaysia have adopted relatively lower tax structures, which support wider smartphone adoption while also maintaining manufacturing competitiveness.
What is worth noting is that smartphone prices in India have already started rising due to the ongoing component pricing issue, and brands have also started announcing frequent price hikes across different segments. With phones under INR 25K also getting affected, affordable smartphones may soon become even harder to purchase for price-sensitive customers.
However, it is currently not known as to how the Indian government will respond to this whitepaper and whether any GST-related relief will be considered for affordable smartphones in the coming days.
Stay tuned for more updates.
