GST on mobile phones after reforms: Will your next phone get cheaper?

What really got cheaper, and what didn’t, after India’s big GST revamp? From September 22, a leaner tax structure will take effect, cutting four slabs down to two, with a hefty 40% bracket carved out for luxury goods like high-end cars, tobacco, and cigarettes. Most everyday products will see lower taxes meant to spark spending and lift the economy.

But mobile phones, one of India’s most widely used gadgets, remain untouched at 18%, despite pleas from the industry to treat them as essentials.

The Goods and Services Tax (GST) system has been simplified, with new tax rates effective from September 22, but mobile phones will not get cheaper as the GST rate remains at 18%. The GST Council's revamp includes reducing the current four tax slabs to two, aiming to encourage spending and support the economy, however, the mobile phone industry had requested a lower 5% GST slab.

Most personal use items will now have lower taxes. The aim is to encourage spending and support the economy. This is especially relevant after high US tariffs on Indian exports.

The current four tax slabs (5%, 12%, 18%, and 28%) will be reduced to two. A special 40% slab will be reserved for luxury items. These include high-end cars, tobacco, and cigarettes.

Taxes on all products, except gutkha, tobacco, and cigarettes, will change from September 22.

Are mobile phones getting cheaper after the GST changes?
No, mobile phones are not getting cheaper. The GST rate for mobile phones is still 18%, even with the new tax system. There was no announcement for cell phone tax rates.

Earlier, India Cellular and Electronics Association (ICEA made a plea for mobile phones and components to be placed in the five per cent GST slab reserved for essential goods, arguing the current 18 per cent cent GST is "regressive".

ICEA urged that mobile phones and components be placed in the five per cent GST slab reserved for essential goods.

The industry body said that the current 18 per cent GST is "regressive" and that mobile phones, a primary tool of digital access, must be treated as necessities in the forthcoming GST reform.

India's mobile phone sector has seen production grow to Rs 5.45 lakh crore in FY25, from Rs 18,900 crore in FY15 while exports have crossed Rs 2 lakh crore, making India the second-largest mobile phone manufacturer globally.

The domestic market has weakened though, according to ICEA.

With 99.5 per cent of mobile phones sold in India now manufactured domestically, stronger domestic demand will directly fuel production, deepen value addition, and strengthen India's global competitiveness, it emphasised.

"However, mobile phones were initially placed in the 12 per cent slab as a transitional compromise. The subsequent increase to 18 per cent in 2020 contradicted this principle and created distortions that hurt affordability and slowed demand. In the pre-GST era, most states consciously capped VAT on mobile phones at 5 per cent, recognising them as essential goods," as per ICEA statement.