Come July 1, you will have to spend more on your phone bills and to buy new mobile handsets as the government decided to impose on them goods & services tax (GST) of 18% and 12%, respectively, distressing the two industries worried about falling consumption and investments.
Mobile users will have to shell out an extra Rs 30 if their monthly phone bill is Rs 1,000, as the tax rate on telecom services will go up from existing 15 per cent to 18 per cent. Likewise, effective talk time for prepaid customers will reduce. For instance, effective talk time on a Rs 100 prepaid voucher will marginally dip to Rs 82 instead Rs 85.
About 80% of the 59 million phones sold in India in January-March were made locally, as per Counterpoint Research. However, phones Made in India will get more expensive, as they currently pay around 7.5-8 percent. With GST, these phones will also fall under the 12 percent slab, as will parts for manufacture.
Accordingly, the 18 per cent GST rate will only increase the cost of telecom services for the common man. The mobile phones industry want the government to come up with incentives by July 1 to ensure that Make in India remains an attractive proposition for contract manufacturers like Foxconn who have invested top dollars in setting up manufacturing plants.
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