GST on mobiles hiked to 18%
New Delhi, March 14: The GST Council on Saturday decided to increase GST rates on mobile phones to 18 per cent from 12 per cent with effect from April 1, Finance Minister Nirmala Sitharaman said. The Council also decided to slash GST on maintenance repair overhaul (MRO) services for aircraft to 5 per cent rom 12 per cent while the tax rate on handmade and machine-made matchsticks has been rationalised to 12 per cent. The Council in its meeting chaired by the Union finance minister decided to waive late fee for delayed filing of annual returns for FY2018, FY2019 by entities with a turnover of less than `2 crore. The minister also said that interest will be levied on net tax liability from July 1 for delayed GST payments.
New Delhi, March 14: GST rate on mobile phones will be hiked to 18 per cent while that on maintenance repair overhaul (MRO) services for aircraft will be lowered to 5 per cent with effect on April 1, finance minister Nirmala Sitharaman said on Saturday.
Briefing reporters after the 39th GST Council meeting, she said Infosys Chairman Nandan Nilekani made a detailed presentation for the transition into a better GST Network system and the requirement of hardware to enhance capacity for addressing the system related issues that are being faced by taxpayers in the IT system.
Demand for more skilled manpower, better hardware to enhance capacity has been agreed to by the Council, she said.
The GST Council has decided that a completely enhanced capacity, a leaner system of GST Network with capacity enhance, staff response, better solutions, which were envisaged and proposed by Nilekani by January 2021, should be completed by July 2020, Sitharaman said.
With regard to GST rates, the minister said there are four sectors — footwear, textiles, fertiliser and mobile phones — which face inverted duty structure wherein inputs are taxed at a higher rate than finished products.
“It was decided by the Council to raise the GST rate on mobile phones and specified parts which presently attract 12 per cent to be taxed at 18 per cent.
“For all other items where there is duty inversion, if there is a need to calibrate the rates for removing inversion, it was decided in one of the future meetings we will take up the issue,” she said.
Counterpoint Research Associate Director Tarun Pathak said, “This will impact the pricing and especially at a time when we are staring at uncertainty in the larger electronics supply chain due to coronavirus. An increase in price means a section of users will either go for second hand or even turn to grey market”.
The GST rate on handmade and machine-made matchsticks has been rationalised to 12 per cent from 5 per cent and 18 per cent respectively. The GST rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft would be reduced from 18 per cent to 5 per cent with full Input Tax Credit and change the place of supply for B2B MRO services to the location of recipient. —
The GST Council has decided that a completely enhanced capacity, a leaner system of GST Network with capacity enhance, staff response, better solutions, which were envisaged and proposed by Nilekani by January 2021, should be completed by July 2020 — NIRMALA SITHARAMAN
Union Finance minister