Indian Cellular Association (ICA), the apex body of the mobile industry, has appealed to the Tamil Nadu government to reduce value added tax on handsets to 5 per cent from 14.5 per cent.
ICA National President Pankaj Mohindroo in his letter to Chief Minister O Panneerselvam said, "The value added tax should be reduced from 14.5 per cent to 5 per cent floor level in Tamil Nadu to help traditional brick-and-mortar retailers be competitive on pricing against online portals."
"E-commerce websites can bill from any of the 25 lower tax locations in the country which follows the IT floor rate of five per cent," Mohindroo said in his letter.
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Tamil Nadu gets zero revenue on E-commerce transaction due to high VAT percentage of 14.5 per cent. More than 20 per cent of mobile phone market in Tamil Nadu is now occupied by e-retailers, he said.
"...We have urged the Government to provide a level playing filed to the organic distribution and retail trade by charging the floor rate of VAT on mobile phones i.E., five per cent." he said.
