GST Council mulls raising tax rate on mobile phones to 18%

In order to boost revenue collection, the Goods and Services Tax Council (GSTC) is mulling to raise Goods and Services Tax (GST) on mobile phones from 12% to 18% in its next meeting scheduled on March 14.

The proposal to raise GST on mobile will be discussed in council meeting chaired by Finance Minister Nirmala Sitharaman on Saturday.

GST Council is also expected to take up the issue of inverted duty structure, which has been raised many times, said ET report quoting an official aware of the development.

The council is set to correct the inverted duty structure, which taxes inputs at a higher rate than output, often result in blocking the manufacturer's working capital.

Many observers of the mobile space including mobile retailers Entrackr spoke to said that this will not only burden the consumers with an increase in prices of mobile phones but the whole mobile industry.

"At a time when coronavirus has already impacted industries across categories, the tax raise on mobile phones, which should be decreased, will prove detrimental the industry," a Delhi-based mobile retailer, who did not wish to be named, told Entrackr.

The government is expected to discuss deferment of the implementation of e-invoicing under GST after getting a lukewarm response during trials introduced in January.

Only 1% of registered businesses under the GST regime used e-invoices on the GST Network (GSTN). It may defer the implementation of e-invoicing till July 1.

Besides, GST Council will also likely to rationalise tax rates on footwear, textiles, e-invoicing and fertiliser.

The operational glitches on the Goods and Services Tax Network portal will also be discussed in the meet.

Last week, Finance Minister Sitharaman had pulled up GSTN executives and technology provider Infosys for not being able to resolve tech issues at a meeting last week.