Smartphones could get cheaper as GST Council considers 5% tax:Tax cuts may make budget and mid-range mobiles cheaper

Thinking of buying a new smartphone? You may want to hold off for a little longer. As phone prices remain under pressure because of rising memory chip costs, a proposed GST cut could give buyers some relief. The GST Council is reportedly considering reducing the Goods and Services Tax on smartphones from the current 18% to 5%. If approved, the move could make smartphones more affordable, particularly for buyers looking at budget and mid-range models. The proposal comes at a time when smartphone sales in India have slowed. Reports suggest shipments fell by around 10% to 11% between April and June compared with the same period last year. Why is the GST rate being reviewed? Smartphone sales in India have been slowing for several months. According to a Business Today report, the government is looking at ways to support demand and prevent a slowdown from affecting the country’s mobile manufacturing sector. Smartphone shipments reportedly dropped 10% to 11% in the April-June quarter compared with the same period last year. The June quarter also saw the sharpest decline in smartphone shipments in six years, according to reports. At the same time, memory chip prices have increased globally. Since memory components are an important part of smartphones, higher chip prices have added to the overall cost of making phones. What will change for smartphone buyers? The biggest possible change is the GST rate. If the proposal is approved, the tax on smartphones could fall from 18% to 5%. This could lower the final price of smartphones and make upgrades more affordable. Budget and mid-range phones could benefit the most because they account for a large share of smartphone sales. For example, on a phone priced at Rs 15,000 before GST, a reduction in GST from 18% to 5% could mean a significant saving for the buyer. However, some reports suggest that the 5% GST rate could be limited to smartphones priced up to Rs 25,000. This means more expensive phones may continue to attract the existing rate. The government has not confirmed this limit yet. Will smartphones actually become cheaper? If the GST cut is approved and manufacturers pass the benefit on to customers, smartphone prices could come down. The timing could also be important. The festive shopping season, including Diwali, is one of the biggest periods for smartphone sales in India. Lower taxes could encourage more people to upgrade their phones during this period. However, the final price will also depend on other factors, including memory chip costs, manufacturing expenses, and how much of the tax benefit manufacturers and retailers pass on to consumers. GST proposal is not final yet It is important to note that the proposed 5% GST rate has not been approved yet. The GST Council is expected to discuss the matter at its next meeting on September 12. However, reports suggest that the complete agenda for the meeting has not been finalised. The proposed change could also require agreement among the states. The 5% GST slab is generally used for essential goods, so moving smartphones into this category would be a significant change. For now, smartphone buyers will have to wait for an official decision before knowing whether the lower GST rate will actually become a reality.