Mobile phone prices may go up by 10% as GST deferment gives no relief

The extension of goods and service tax return filing timelines will hardly provide any relief to mobile phone manufacturers who are staring at a 6% GST rate hike applicable from April 1.

"Mobile manufacturers will get relief as far as date is concerned but they will be charged as per hiked GST rate, which will be 18% from April," said a senior accountant with one of the 'big four' accounting firms in India on condition of anonymity.

Industry experts said that there is no relief for mobile manufacturers until the hike in GST is rolled back.

Mobile phones price will go up by about 10% as smartphone brands are in no position to absorb the increase due to the economic slowdown and now the lockdown over Covid-19 hampering their demand and supply, experts said.

On Tuesday, FM had announced relaxation for delayed deposit of TDS and interest rate halved to 9% for payments to be deposited by June 30 2020.

Speaking to Entrackr, Arvinder Khurana, national president of the All India Mobile Retailers Association (AIMRA), said that the government should reconsider the GST hike first as lockdown has already hampered the sales growth of mobile phones.

"For the month of March, sales have already been down to 50%. Until the lockdown gets over, there is no likelihood that it will get any better in the coming months. Therefore, the government should be a bit considerate on their decision," he said.

AIMRA president also confirmed that he has got verbal communication from some of the mobile brands including Samsung and Xiaomi that they will raise prices following the hike. Realme has also conveyed that the GST hike will lead to a rise in prices of their phones.

Khurana further said that he will raise the issue with the GST Council and the government when they meet next.

In the past few months, the smartphone market has witnessed a downfall in growth. India has witnessed at least 15% downfall in shipments in the January-March quarter, according to Counterpoint Research.

Earlier on March 14, the GST Council had raised the GST on mobile phones from 12% to 18%.

Opposing the decision, Industry associations and bodies had also demanded an immediate rollback.

Manu Kumar Jain, managing director of Xiaomi India, had opposed the move and had said that the GST hike will crumble the mobile industry in India.