The Goods and Services Tax (GST) applicable on mobile phones in India currently stands at 18%. This rate, effective since April 1, 2020, applies uniformly to both smartphones and feature phones. Prior to this, mobile phones attracted a lower GST rate of 12%. The increase was implemented by the GST Council to address the issue of an inverted duty structure in the mobile phone industry.
An inverted duty structure occurs when the tax on inputs (components and raw materials) is higher than the tax on the finished product. In the case of mobile phones, parts such as batteries and display screens were taxed at 18%, while the finished phone attracted only 12% GST. This led to accumulation of unutilized input tax credit (ITC) for manufacturers. To correct this, the Council raised the GST on mobile phones to 18%, aligning it with the rate on major components and enabling smoother ITC claims for manufacturers.
Under the current GST structure, for intra-state transactions, the tax is divided equally between Central GST (CGST) and State GST (SGST) — 9% each. For inter-state transactions, Integrated GST (IGST) at 18% is levied.
The GST rates for mobile accessories and related components vary. While mobile phones fall under HSN code 8517 and attract 18% GST, some accessories and spare parts are taxed higher. Chargers, cables, and power banks, for instance, fall under HSN code 8504 and are taxed at 28%. Batteries (HSN codes 8506/8507) are also subject to 28% GST. However, products like earphones, headphones, speakers, tempered glass protectors, and memory cards are generally taxed at 18%.
To illustrate the tax burden, consider a mobile phone priced at ₹20,000. With 18% GST, the final price paid by a consumer becomes ₹23,600. Before April 2020, when the GST rate was 12%, the same phone would have cost ₹22,400. Thus, the rate hike has resulted in a direct increase of ₹1,200 on a phone of this value.
From a business perspective, companies registered under GST can claim input tax credit on mobile phones purchased for official use, provided they have a proper tax invoice and the usage is demonstrably business-related. However, ITC is not available for personal or unregistered purchases.
In terms of tax compliance, intra-state purchases attract CGST and SGST, whereas inter-state sales are subject to IGST. Businesses must ensure correct classification of goods and maintenance of proper documentation to avail credit and avoid disputes.
The mobile phone industry has also seen complementary policy initiatives such as the Production Linked Incentive (PLI) scheme, aimed at boosting domestic manufacturing. Additionally, the government has reduced import duties on certain components like printed circuit board assemblies, camera modules, and USB cables to support the “Make in India” initiative. These steps are expected to ease the cost pressure on manufacturers in the long run.
Consumers are advised to always check if the listed price of a mobile phone includes GST to avoid confusion at the point of sale. Since accessories are taxed differently, buyers should factor in the higher GST rates on items like chargers and batteries when budgeting. For businesses, maintaining proper tax records and ensuring compliance with GST provisions is key to claiming ITC.
In conclusion, mobile phones in India are currently taxed at 18% under GST, a move aimed at correcting structural anomalies in the tax system. While this has marginally increased the cost to consumers, it has simplified the taxation structure for manufacturers. The GST rate, along with supportive government policies, is shaping the broader ecosystem of mobile phone production and consumption in India.
