Although we're still some way away from the GST becoming a reality in India, the two-day GST-council meet has begun, and is working on slabs for different items. There is a four-tier tax structure, of 5, 12, 18, and 28 percent that will be followed, along with a cess on certain items. According to reports, this is not going to have good results for people who want to buy gadgets, as the tax on things like mobiles, DTH, Internet services, and so on are likely to go up.
This will also have an impact on the Make in India initiative, as phones being assembled in India were significantly cheaper thanks to lower duties. With GST, phones will become available with a duty of just 12 percent, compared to 17 to 27 percent earlier so imported phones should get cheaper.
However, phones Made in India will get more expensive, as they currently pay around 7.5-8 percent. With GST, these phones will also fall under the 12 percent slab, as will parts for manufacture.
This means that phones in general will become a little more expensive, and it will likely also make it more attractive for brands to manufacture their devices outside of the country, unlike the scenario today.
"Almost four out of five mobile phones shipped were made in India during Q1 2017," pointed out Counterpoint Research. "The imposition of the Goods and Services Tax (GST) will have an impact on domestic manufacturing and the government will need to continue incentives for locally manufactured mobile phones to further push the domestic manufacturing ecosystem."
Game consoles and the games themselves are currently charged a 28.5 percent duty. Under GST, these will fall under the highest slab, of 28 percent, according to details found online. Expect prices to remain unchanged on that front.
For TVs and computers, things seem to be a little less clear. We came across details for parts, some of which fall under the 18 percent slab, and some under the highest 28 percent. Presently, you're paying 26.5 percent on laptops and televisions, while computer parts attract 10.3 percent, so this would imply that PCs and laptops and TVs are all going to get a little more expensive in India once the GST is in place.
Meanwhile, others are also taking steps to prepare for the rollout of GST. For example, Dell is collaborating with key trade associations across engineering, textile, commerce, finance, manufacturing sectors among others to offer hassle-free GST-ready solutions to all the small businesses which work closely with these associations.
"Small businesses should have access to the right resources and information to make this transition and to become GST-ready," said P Krishnakumar, Vice President, Consumer & Small Business, Dell, India.
Software services provider Zoho launched a GST-compliant finance suite, Zoho Finance Plus. "The proliferation of smartphones, broadband connectivity and upcoming GST regimen is a great opportunity for businesses to move their accounting and other operations online," said Sivaramakrishnan Iswaran, Director of Product Management, Zoho.
A tax expert joined us to talk about the impact of GST on prices of gadgets and IT services in India on Orbital, our weekly technology podcast. You can subscribe to it via Apple Podcasts or RSS or just listen to this episode by hitting the play button below.