The GST rate on mobile phones and accessories was increased from 12% to 18% effective 1st April 2020, as decided in the 39th GST Council meeting. Additionally, Budget 2023 proposed a hike in import duty on components used in mobile manufacturing, leading to increased costs. This article explores the GST rate on mobile phones, its impact on pricing, GST on mobile accessories, import duty implications, and input tax credit eligibility.
Impact of GST on Mobile Phone Prices
Before GST, mobile phones were subject to excise duty and VAT, with VAT rates differing across states, making pricing inconsistent. With GST, a uniform 18% tax rate applies nationwide, ensuring standardized pricing for mobile phones.
Below is a comparison of mobile phone pricing before and after GST implementation:
| Particulars | Pre-GST | Post-GST |
| Cost of manufacturing (a) | ₹8,000 | ₹8,000 |
| Excise duty @1% (b) | ₹80 | – |
| Base value for VAT/GST (c) | ₹8,080 | ₹8,000 |
| VAT @14% / GST @18% (d) | ₹1,131 | ₹1,440 |
| Sale price to retailer (e) = (a) + (b) + (c) + (d) | ₹9,211 | ₹9,440 |
| Value addition/packing charges (f) | ₹500 | ₹500 |
| Total value (g) = (c) + (f) | ₹8,580 | ₹8,500 |
| VAT @14% / GST @18% on (f) | ₹70 (1,201-1,131) | ₹90 (1,530-1,440) |
| Final Price | ₹8,650 | ₹8,590 |
As seen in the comparison, the GST system has helped reduce mobile phone prices by eliminating the cascading effect of multiple taxes.
Before GST, smartphone prices varied across states due to differing tax rates. However, under the GST regime, a uniform 18% tax is applied nationwide. The corresponding HSN code for mobile phones is 8517.
Mobile phones and accessories fall under HSN Chapter 85. Below is the GST rate applicable to different mobile-related products:
| Product Name | HSN Code | GST Rate |
| Mobile phones | 8517 | 18% |
| Lithium-ion batteries | 8507 60 00 | 18% |
| Power bank | 8507 | 18% |
| Memory card | 8523 | 18% |
| Speakers, headphones, earphones | 8518 | 18% |
| Plastic screen protector | 3919 | 18% |
| Tempered glass screen protector | 7007 | 18% |
| Parts used for manufacturing mobile phones | 85 | 12% |
With a standardized GST rate, mobile phone pricing has become consistent across the country, eliminating state-wise tax variations.
GST on Mobile Phones – Types, Applicability, and Impact
The introduction of GST has streamlined India’s tax system by unifying taxes on goods and services. Mobile phones, whether smartphones or feature phones, are subject to GST without any exemptions.
GST Applicability on Mobile Phones: Inter and Intra-State Taxation
- Intra-State Purchase: If a buyer purchases a mobile phone from a dealer within the same state/Union Territory, CGST (9%) and SGST (9%) are applied.
- Inter-State Purchase: If a buyer purchases a mobile phone from a different state/Union Territory (e.g., via e-commerce), IGST (18%) is levied.
Composite Supply and GST on Mobile Accessories
Under GST, composite supply refers to a naturally bundled set of goods/services sold together. The principal supply determines the applicable GST rate.
- Mobile phones are generally sold with a charger and USB cable, both of which are essential for usage. Hence, they are taxed at the same GST rate as the mobile phone (18%).
- Earphones, in some cases, are included in the package but are not naturally bundled. Therefore, they are classified as mixed supply and may attract a separate GST rate.
Value of Supply for GST on Mobile Phones
The value of supply is the price charged by the seller for the sale of goods/services. GST is applied based on transaction value (price at which unrelated parties transact).
Impact of Exchange Offers
Many smartphone dealers offer exchange programs, allowing customers to trade old phones for new ones at a discounted price. Under VAT, this reduced price wasn’t taxable. However, under GST, barter transactions are taxable, and GST applies to the full price.
Example:
- A new mobile phone is priced at ₹25,000.
- A customer exchanges an old phone and pays ₹20,000.
- Under GST, tax is still calculated on ₹25,000, not the reduced price.
Exclusion of Discounts
Trade and quantity discounts are not included in taxable value if:
- Discounts are mentioned in the invoice.
- Input Tax Credit (ITC) is reversed based on the discount received through credit notes.
GST on Imported Mobile Phones
Recent Budget Updates
- Budget 2024: Proposed a reduction in Basic Customs Duty (BCD) from 20% to 15% on mobile phones, chargers, and PCBA.
- Budget 2023: Removed import duties on camera lenses and components used in manufacturing mobile phone cameras.
Previous Taxation Changes
- Budget 2020: Reintroduced 10% social welfare surcharge on imported mobile phones, increasing their price.
When importing mobile phones, IGST is charged on the total value, which includes:
Assessable Value + Basic Customs Duty + Other Duties
This has contributed to higher costs for imported mobile devices.
Can ITC Be Claimed on Mobile Phones?
Yes, businesses can claim Input Tax Credit (ITC) on mobile phones, provided:
- The phone is purchased for business purposes.
- A valid tax invoice is available, including:
- Company name, GSTIN, HSN Code, and GST amount.
- The supplier has filed GST returns and paid the tax.
To verify a company’s GST number, businesses can use a GSTIN search tool.
Impact of GST on Mobile Phone Prices & Market Dynamics
Changes in Mobile Phone Pricing
Before GST, mobile phones were taxed under VAT (5-14%) + Excise Duty (1%), leading to price variations across states. Under GST, a flat 18% rate applies nationwide, bringing price uniformity.
Key Impacts:
✅ Price Consistency: Eliminates state-wise price differences.
❌ Higher Tax Rates: Mobile phones are now taxed at 18%, slightly increasing costs.
✅ No Tax Cascading: Removal of excise and VAT reduces double taxation.
Benefits to Smartphone Dealers
(A) Increased Sales: Mobile phones are essential commodities, driving constant demand.
(B) Healthy Competition: Standard tax rates have reduced unfair pricing advantages.
(C) Elimination of Online Tax Benefits: E-commerce players previously exploited VAT differences between states to lower prices. GST has reduced this gap.
Overall, GST has simplified mobile phone taxation, ensuring transparency and ease of business operations.
FAQs on GST on Mobile Phones: Applicability, HSN Code, and GST Rate
1. What is the GST rate applicable to mobile phones in India?
The GST rate on mobile phones in India is 18%, as per the revised rates applicable from April 1, 2020.
2. What is the HSN code for mobile phones?
The HSN code for mobile phones is 8517.
3. Does GST apply to both smartphones and feature phones?
Yes, GST at 18% applies to all types of mobile phones, including smartphones, feature phones, and keypad phones.
4. Is GST applicable to mobile phone accessories?
Yes, mobile phone accessories are also subject to GST, but the rate varies depending on the type of accessory. Some accessories may attract 18% or 28% GST, based on their classification.
5. Can I claim an input tax credit (ITC) on mobile phones?
Yes, businesses registered under GST can claim input tax credit (ITC) on mobile phones if they are purchased for business use and not for personal purposes.
6. Is GST applicable when buying a mobile phone online?
Yes, whether you buy a mobile phone online or from a physical store, 18% GST is included in the price.
7. How is GST calculated on mobile phones?
GST is calculated as 18% of the taxable value of the mobile phone. For example, if the phone costs ₹10,000, the GST amount will be ₹1,800, making the total price ₹11,800.
8. Is there any GST exemption on mobile phones?
No, currently, there are no GST exemptions or reductions for mobile phones in India.
9. What is the GST rate on used or second-hand mobile phones?
Used or second-hand mobile phones are taxed under the margin scheme. If the seller is registered under GST, GST is charged only on the profit margin instead of the full price.
10. Do imported mobile phones attract GST?
Yes, imported mobile phones are subject to 18% GST along with custom duties, as per the import regulations in India.
