Government says Smartphones and Medical Devices will become cheaper with GST

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The central government has issued calculations supporting it’s stance that with GST, the overall indirect tax burden will be eased, leading to greater benefits for the consumers. This is in line with the Government’s aim that the advantages of implementation of GST on smartphones, medical equipment etc. should pass on to the consumers.

The GST will be implemented on the scheduled date, i.e. 1st July 2017.

The government has also raised a warning to invoke anti-profiteering clause where the gains of GST will not be passed on to the consumers from July 1.

To counter the opinions of mobile phone manufacturers, the government stated that smartphones attract 2 percent excise duty and VAT varied from one state to another, in the range of 5 – 15 percent.

“Weighted average VAT rate on smartphones works out to about 12%. Thus, the present total tax incidence on smart phones works out to more than 13.5%. As against this, the proposed GST rate for smart phones is 12%,” an official statement said.

In the case of medical equipment and devices, which also includes surgical instruments, the tax burden will reduce with the GST rate pegged at 12 percent instead of the current incidence of 13 percent and more, including 6 percent central excise duty and 5 percent VAT. These companies also pay other taxes and duties in addition, including central sales tax, octroi, entry tax and more.

The government has released product-wise rates of taxation under GST. This has led to many schools of thought. One such school of thought, comprising of smartphone manufacturers suggests that GST would lead to increase in prices of these goods. The government, on the contrary, maintains that as the tax burden will be released owing to lower GST coupled with the benefits of input tax credit and removal of many cesses and surcharges will lead to slashing of prices.

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Sheetal Singh, From ITvoir News Desk

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