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Double bad news for mobile users

NEW DELHI: Come July 1, you will have to spend more on your phone bills and to buy new mobile handsets as the government decided to impose on them goods & services tax (GST) of 18% and 12%, respectively, distressing the two industries worried about falling consumption and investments.

Mobile users will have to shell out an extra Rs 30 if their monthly phone bill is Rs 1,000, as the tax rate on telecom services will go up from existing 15% to 18%.

Likewise, effective talk time for prepaid customers will reduce. For instance, effective talk time on a Rs 100 prepaid voucher will marginally dip to Rs 82 instead Rs 85.

 Similarly, most mobile phones may get costlier by 4-5% after the GST rate was fixed at 12%, which will make locally manufactured devices more expensive as they currently operate under lower tax rates due to benefits provided for local manufacturing.

About 80% of the 59 million phones sold in India in January-March were made locally, as per Counterpoint Research. The industry has said it hopes the government will come up with steps to keep benefits of local manufacturing vis-a-vis imports intact, like in the pre-GST regime, else millions of dollars of investments made over the last year or so will be at risk.

“The telecom industry is disappointed with the announced GST rate of 18%, which will further stress an already bleeding sector,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI).

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