Govt hikes GST by 6%, cell phones set to get expensive
GST COUNCIL MEETING Panel may postpone the implementation of the new return filing system and e-invoicing
NEW DELHI: Mobile phones are all set to get expensive after the centre’s decision to hike the Good and Services Tax (GST) on cellular handsets to 18% from the current 12%. The decision was taken during the 39th GST Council meeting held on Saturday in New Delhi.
Finance minister Nirmala Sitharaman chaired the meeting also attended by finance ministers of States & UTS and senior officers from both Centre and states.
“Unanimously it was decided that the GST on mobile handsets be raised due to the inversion,” she announced in a press conference on Saturday afternoon. While the duty levied on mobiles was currently 12%, some of its components attracted an 18 % duty.
Agencies reported earlier this week that the GST Council may end up rationalising the tax rates for five sectors, including mobile phones, footwear and textiles.
According to a Livemint report, manufactured goods like fertilisers, mobile phones, footwear, renewable energy equipment, and man-made yarns attract a GST of 5-12%, thereby leading to an inverted duty structure, where GST on finished goods is less compared to the duty on inputs.
The inverted structure-- when the tax outgo on finished products is lower than the tax on raw materials—requires the government t o ref und t he excess amount.
It was also reported that the panel in its Saturday meeting may decide to postpone the implementation of the new return filing system and e-invoicing from the earlier proposed launch date of April 1.
The postponement, it was reported, was partially on the account of continuing glitches on the GST portal that had resulted in several complaints by end-users. The finance minister was reported to have raised the issue with Infosys, responsible for the back-end management of the
GSTN website. The finance ministry has issued a statement on the gross Goods and Services Tax (GST) collection in the month of February this year, which has been pegged at ~1,05,366 crore.
According to t he Union finance ministry, the GST revenues during the month of February 2020 from domestic transactions have shown a growth of 12 per cent over the revenue during February last year.
Taking into account the GST collected from the import of goods, the total revenue during February 2020 has increased by 8%compared to the revenue of February 2019.
During this month, the GST on import of goods has shown a negative growth of 2% as compared to February 2019.
Earlier, the finance ministry had said that the country is saving ~1 lakh crore by removing corruption and wrongdoing through the efficient use of technology.
GST was launched on July 1, 2017 to create a unified tax regime to end complications resulting from the need to deal with over a dozen indirect taxes including excise and service taxes.
Official sources claimed that the increase in rates on various items would lead to “very marginal increase” in prices for the consumers. “The increase in rates on chemical fertilisers from 5 % to 12 % would result in a little subsidy burden for the government. In case of other items, the impact on prices would be minor,” an official said.
He noted that the move was in accordance with the recommendation of the fitment committee and was aimed at removing inverted duty anomalies.