In a bid to ensure that the benefits of lower GST on products like smartphones is passed on to consumers, the Centre released on Monday calculations to show how the burden of indirect taxes will come down in the new regime.
The detailed analysis from the finance ministry comes days after the GST Council, comprising ministers from the Centre and states, decided on product-wise tax rates and the government threatened to invoke the anti-profiteering clause if the gains were not passed on from July, the scheduled date for GST launch.
Some manufacturers, such as mobile phone and white goods companies, have suggested that prices may rise once GST kicks in although the government has repeatedly said that in most cases, not only is the burden lower but the advantage of input tax credit — or gains from refunds for taxes paid — will ensure that prices come down. In addition, several cesses and surcharges are going away.
In case of smartphones, the government countered the claim of handset manufacturers and said smartphones currently attracted 2 percent central excise duty, while VAT rates varied from state to state and was in the 5-15 percentrange.
In general, smartphones attract 6 percent central excise duty and 5 percent VAT apart from CST, octroi and entry tax. All this results in a combined levy of around 13 percent, while GST has been fixed at 12 percent.
By Baishakhi Dutta
