Mobile phones may get cheaper as GST Council weighs rate cut on September 12

The GST Council could review the 18% tax on handsets amid a sharp slowdown in smartphone demand, alongside a wider push to ease compliance for businesses at its first meeting in over a year.

Mobile phones could become cheaper if the Goods and Services Tax (GST) Council goes ahead with a proposal to lower the current 18 per cent tax rate on handsets at its meeting scheduled for September 12. The move is being weighed against a backdrop of slowing demand for mobile phones in India, with the Council set to convene for the first time in 374 days.

Shift from rate rationalisation to compliance ease

While the Council's previous meeting centred largely on rationalising GST rates across categories, the upcoming session is expected to place greater emphasis on making compliance simpler for businesses. Alongside the mobile phone rate proposal, officials are likely to take up a broader set of concerns tied to GST compliance and input tax credit claims.

One issue expected to feature prominently is the inverted duty structure, a long-standing anomaly where the GST paid on raw materials and inputs ends up higher than the tax charged on the finished product, squeezing manufacturers' margins. The Council may also weigh safeguards for buyers who lose access to input tax credit when their suppliers fail to deposit the tax they've collected — a problem that has repeatedly hit genuine businesses despite their own compliance.

Push for automation and cess review

A separate proposal on the agenda involves shifting refund processing toward a more automated, risk-based system that draws on data from the GST Network (GSTN) and e-invoicing records, aimed at speeding up refunds and reducing manual intervention.

The Council is also expected to take up the matter of the accumulated Compensation Cess, a levy originally introduced to compensate states for revenue losses following the GST rollout, which continues to require resolution.

Taken together, the September 12 meeting is expected to address both the mobile phone tax question and a broader set of measures aimed at easing compliance, freeing up working capital for businesses, and cutting down on recurring tax disputes between authorities and taxpayers.