GST on Mobile Phones: All You Need to Know

What are the GST Rates on Mobile Phones?

In India, the GST rate on mobile phones is 18%. This means that an additional 18% of tax is added to the price of the mobile phone. GST is calculated by multiplying the tax rate with the price of the mobile phone.

Let’s understand this with the help of an example. Suppose the price of a mobile phone in India is Rs.20,000. The GST on this mobile phone will be 18% and will amount to (18% * 20,000) Rs.3600. This tax amount will be added to the cost of the mobile phone. Therefore, the total price of the mobile phone will be Rs. (20,000 + 3600) = Rs.23,600.

Mobile phones are categorized under HSN code 8517, and a uniform nationwide rate of 18% applies to mobile phones. Here’s a table summarizing the GST rates on mobiles and related accessories -

What are the Types of GST Applicable on Mobile Phones?

Here are the types of GST that can be applied to mobile phones based on the nature of the supply.

SGST, CGST, or IGST Applied

If you purchase a mobile phone from a dealer located in the same state or Union Territory, then he will have to pay CGST @9% and SGST @9%. If he purchases the mobile phone from a different state or union territory, an IGST @18% will be applicable.

Nature of Composite Supply

Under GST, a composite supply involves two or more goods or services that are naturally bundled and typically sold together in the course of business. These items cannot be sold separately. Among them, one is considered the principal supply, and its GST rate is applied when raising the invoice. For example, when selling a mobile phone, it is usually packaged with a charger and USB cable, which are essential for using the phone. Therefore, the GST rate for the mobile phone also applies to the charger and USB cable.

What is the Value of Supply to Compute GST on Mobile Phones?

• Value of Supply - The value of supply refers to the money that the seller collects from the buyer on the sale of goods and services. In the case of related parties, GST is charged on transaction value, whereas, in the case of unrelated parties, GST is charged on transaction value.
• Exchange Offers - Smartphone dealers often provide exchange offers, where customers can get new handsets in exchange for old ones and pay a differential sum. Under the earlier applicable VAT, this reduced sum was not subject to tax. However, under GST, barter is included in the definition of supply, and therefore, the reduced price is taxable.
  For example, if a new phone is sold for Rs.20,000 in exchange for an old phone, but the price of the new phone without exchange is Rs.30,000, then GST will be charged on Rs.30,000, i.e., the entire value of the new phone.
• Exclusion of Discounts - Trade discounts and quantity discounts are a common trade practice. Discounts recorded on the invoice are excluded from determining the taxable value if the conditions below are met -
  • Discounts are reflected in relevant invoices.
  • ITC should be reversed on the discount received as per the credit note.

Can You Claim ITC on Mobile Phones?

Input Tax Credit or ITC on mobile phones can be claimed if the mobile phones have been purchased for business purposes. The invoice should include details like the name and address of the company, GSTIN, HSN code, and the GST amount charged. The mobile phone must be received by the recipient, and the supplier files their GST returns and pays tax to the government.

The implementation of GST has simplified indirect taxation, made taxes easier, and brought about uniformity and transparency. It also allows the customers to claim Input Tax Credit (ITC). However, it is important to maintain compliance with the GST law and ensure proper GST registration and GST filing. If you need help with GST registration or GST filing services, our tax experts are just a click away. Our CAs will help you be compliant with the GST law and avoid penalties and consequences. Book an Online CA Now!