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39th GST Council Meeting: GST on Mobile phones increased

gst on mobile

In the 39th GST Council Meeting, it was decided to increase the Goods and Services Tax rates on Mobile phones and some specified parts from 12 percent to 18 percent.

It was done to correct the anomalies in the duty structure. It was also decided to slash GST on maintenance repair overhaul services for aircraft from 12 percent to 5 percent.

The tax rate on handmade and machine-made matchsticks have been rationalized to 12 percent.

Union Finance Minister Nirmala Sitharaman said, “All these changes will come with effect from 1st April 2020”.

Mobile parts were being taxed at the same rate as the finished products, which meant that mobile manufacturers were often unable to get their full tax offsets.

Officials said this anomaly has now been corrected.

“GST increase for phones from 12 percent to 18 percent will crumble the industry. The smartphone industry is already struggling with profitability issues due to depreciating rupee value. Everyone will be forced to increase prices. 

This will further weaken the mobile industry’s #MakeInIndia program,” Xiaomi India MD Manu Jain tweeted.

Apart from mobile phones, items such as footwear, fertilizers and man-made fibers were discussed as facing inverted duty structures. However, a decision on the GST rate hike on these items has been postponed until the next meeting.

There is some good news as Small businesses got some relief from the latest GST Council meeting, with the deadline for GSTR-9C being extended.

For those with annual turnover below Rs 5 crore, the due date for filing annual returns and reconciliation statements for FY19 was extended to June 30, 2020.

The council also waived late fee for delayed filing of annual returns for FY18 and FY19 by entities with turnover of less than Rs 2 crore.

The minister also said that interest will be levied on net tax liability from 1st July for delayed GST payments.

Infosys chairman Nandan Nilekani made a detailed presentation to the GST Council and proposed a roadmap towards the overhauling of GST Network to address all glitches by January 2021.

However, the council has decided to give it time until the 1st of July 2020, while agreeing to its demand to deploy more skilled manpower and increase the capacity of the hardware.