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GST filing deferment no relief for mobile phone makers after recent rate hike


NEW DELHI: The deferred submitting of Goods and Services Tax returns received’t supply a lot of a breather for mobile phone producers, which face a 6 proportion point rate increase on handsets from April 1 and an extra drag on demand, already plunging amid the Covid-19 outbreak.

“Though returns can also be filed until June 30, any telephone sold after April 1 (together with stock) can be billed at 18% GST (from 12% currently),” mentioned Abhishek Rastogi, a spouse at law company Khaitan & Co.

What the sector wanted was an allowance to pay this tax in a deferred way over the following six months, differently it's infrequently any relief, Rastogi mentioned.

According to marketplace research company International Data Corporation, even after the 21-day national lockdown results in mid-April, it will take at least two quarters for demand to revive. Realme and Samsung have already mentioned the increase in GST can be handed directly to consumers.

An intelligence company that tracks the smartphone marketplace has cut this 12 months’s enlargement estimate to 5.5% from 8% previous. Realme has estimated that telephone costs may go up through 12-15% for reasons together with fluctuation in rupee-dollar change charges, impact of Covid-19 on the provide chain for components, an increase in memory costs of smartphones, and better GST.

“At Realme, we try to absorb the first three impacts. However, it will not be feasible for us to absorb GST increase impact,” it had mentioned.

The GST Council higher the velocity on cell phones to 18% from 12% on March 14 to correct an inverted duty structure that taxed components at a better rate than the instrument.

“While Samsung and Realme have written to us about their decision to move on the new charges, others have communicated verbally,” Arvinder Khurrana, president of the All India Mobile Retailers Association, informed ET. Xiaomi and Vivo mentioned they're but to take a choice in this.

ET had reported that the verdict may result in job losses and nullify efforts to make India a smartphone production hub.

In the wake of the Covid-19 crisis, finance minister Nirmala Sitharaman mentioned on Tuesday that investors with an annual turnover of less than Rs 5 crore can file GST returns for March, April and May through June 30 with out late fees or consequences.


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