GST impact: Will mobile phones cost more with 10% basic customs duty?

The Central Government has imposed a 10 percent basic customs duty on mobile phones with effect from July 1. Prices of other handset components like charger, battery, wired headset, microphone and receiver, keypad, and USB cable will also be affected with the new basic customs duty.

The basic customs duty will also be applicable on certain other electronic goods, which have not yet been revealed by the Ministry of Finance.

Also Read: GST effect: Will mobile phones, TVs, computers and other consumer electronics become cheaper?

The present exemption from basic customs duty on specified parts of mobiles namely, Printed Circuit Board Assembly (PCBA), Camera Module, Connectors Display Assembly, Touch Panel / Cover Glass Assembly, Vibrator Motor / Ringer will continue, confirms the official release.

Furthermore, inputs and raw materials for the manufacturing of parts of these specified electronics goods, including mobile phones, will also continue to be exempt from BCD, added the release.

The Government had reportedly constituted Inter-Ministerial Committee [IMC] to identify electronic / IT / telecom products, which are not Information Technology Agreement [ITA] – I bound, for customs duty enhancement.

The committee comprises officers from Ministry of Electronics and Information Technology, the Department of Commerce, Department of Telecommunication and Department of Revenue.

Earlier, mobile phone vendors and industry experts had suggested the GST launch will have no impact on the smartphone pricing.

Leading smartphone makers including Samsung, Xiaomi, Oppo, Gionee, Intex and Lava have confirmed that "they have plans to absorb the impact from the new tax system that comes into effect" starting July 1.

With the basic customs duty in place, it is not yet known how the price control would be done for mobile phones as the raw materials used in the making of these handsets is completely exempted from the basic customs duty.