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Telecom services, mobile phones to be expensive under GST

Press Trust of India  |  New Delhi 

Telephone bills and mobile handset prices will go up from July 1 when the new Goods and Services regime kicks in, raising incidence of taxation on the telecom sector.

The Council today finalised 18 per cent on services rendered by telecom operators against 15 per cent at present.


This translates into a Rs 3 increase on a Rs 100 recharge or a monthly rental but secretary Hasmukh Adhia insisted that consumers will not burdened if telecom companies were to take into account the benefit of input credit they will get under

However the industry said as a matter of principle is a pass through to consumers, and any increase in incidence of taxation will reflect in the monthly bills.

Mobile industry body COAI Director General Rajan S Mathews expressed disappointment with the rate announced for telecom.

"We had submitted to the that consideration must be given to the present financial condition of the sector and any rate beyond the existing rate of 15 per cent makes the telecom services more expensive for the consumer," he said.

The debt-ridden telecom sector, which is looking for a bailout package, said the telecom services will become expensive for consumers and have impact on government's project like digital India, digital payments etc.

At present, telecom consumers are charged 15 per cent in form of and cess over their phone bills.

Consumer will not get upfront relief from the refund rules, the industry insisted.

"You have to differentiate between impact of on companies and consumers. Companies may or may not structure their tariff as per provision of refund but customers will have to pay 18 per cent everytime bill is generated so consumers will be hit under GST," Mathews said.

The double whammy for consumers also includes an extra outgo of 4-5 per cent on mobile phones in majority of the states.

As per mobile phone industry body, Indian Cellular Association (ICA), there are 36 jurisdiction in the country which includes 29 states and seven union territories. In 30 of these territories, the on mobile phones will nearly double to 12 per cent leading to an increase in the prices.

Three states- Gujarat, Maharashtra, Madhya Pradesh - which account for 25 per cent of pan India sales, have in the range of 12.5-16 per cent.

In these locations discounts are already offered to counter grey market products and hence any change in prices is unlikely, an industry source said.

"While we are partially relieved that we are at 12 per cent rate, it would be more appropriate to put mobile phones at the 5 per cent rate so that the benefits of digital revolution could be savoured by our 1.2 billion citizens," ICA, National President, Pankaj Mohindroo said.

The handset prices will rise in places where incidence is up to 6 per cent. Such locations account for 66 per cent of the total sales.

The rest comes from states or UTs where current slab is in the range of 8-9 per cent. These areas could possibly see rise in the mobile phone prices.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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