Sibal seeks lower tax on mobile phones, tablets: Reports

If implemented, the prices of the mobile phones and tablets in the country could go down by 7-8 percent. The move is likely to help the government deter the grey markets in the country.

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Union telecom minister Kapil Sibal has sought giving mobile phones and tablets special importance under the Central Sales Tax. According to reports, the minister has already written to a committee of state finance minister, headed by Bihar Deputy Chief Minister Sushil Kumar Modi, in this regard. If Sibal's request is implemented, the mobile phones and tablets could see an 8 percent cut approximately. Moreover, it could help deter the flourishing grey markets in the country.

“Considering the huge potential that mobile phones and tablets have in transforming the overall development of the country. Sibal has requested that the Empowered Committee of the State Finance Ministers consider the proposal to declare mobile phones and tablets as goods of special importance under the CST (Central Sales Tax) Act,” a source is quoted as saying.

Kapil Sibal also wants the states to declare mobile phones and other electronic products used for Internet access under the category as per the National Policy on Electronics, 2012

Most states charge more than 12.5 percent tax on mobile phones, but if given special importance under CST Act 1956, they can only levy 5 percent tax on the gadgets.

“If states act on this request, the price of mobile phones and tablets in most states will come down by eight per cent,” Indian Cellular Association president Pankaj Mohindroo is quoted as saying.

However, the 8 percent price cut is possible only in few states such as Maharashtra, Gujarat, Tamil Nadu, Chattisgarh, Madhya Pradesh. Mohindroo pointed out some states such as Delhi have deployed system of dual taxing, where taxes are charged on the basis of the number of units sold in the state.

“Many Chinese phones sold in grey market don't pay VAT (Value Added Tax). It is very ironical to see that a laptop costing Rs 1 lakh is taxed at 5 per cent rate where as mobile phone which comes at low price is taxed at rate of more than 12.5 per cent in many states,” he added.