Mobile handset manufac-turers seek urgent rollback of increase in GST rate

Manufacturing companies of mobile handsets have said that the recent 50% increase in GST rate was ‘erroneously’ based on the premise that pre-GST excise duty rate was 12.5%, when it was just 2%.

They sought an urgent roll back of the increase, saying it would “devastate” the sector already reeling from the impact of the Covid-19 outbreak, lead to huge job losses and a strong return of the grey market.

The India Cellular & Electronics Association (ICEA) said in a letter to Nirmala Sitharaman that the increase in the GST rate to 18% effective April 1 from 12% would “draw out Rs 15,000 crore from the ecosystem and devastate the retail sector already under attack from Covid-19”. ICEA further stated that it would further impact 80 crore consumers at a time when their spending capacity could come under pressure.

Before the implementation of GST, the composite VAT was between 6% and 7% and the mobile industry expected the total tax incidence would come down after the implementation of GST, the ICEA said in the letter. This, however, was increased to 12% in July 2017.

“GST was introduced with the principle of revenue neutrality and by the assertion that total tax incidence will in fact come down after introduction of GST,” ICEA chairman Pankaj Mohindroo has said in the four-page letter to Sitharaman.