India’s GST Council is debating a potential reduction in the goods and services tax on mobile phones from 18% to 5%, aiming to boost consumer spending and aid domestic handset manufacturing amid a recent slowdown in smartphone shipments.
India’s tax authorities are considering a cut in the goods and services tax on mobile phones, a move that could bring some relief to buyers and handset makers after a sharp slowdown in demand. The current 18% rate may be reduced to 5% when the GST Council meets in New Delhi on 12 September, according to reports in LiveMint, Moneycontrol and The Times of India. The proposal comes as policymakers weigh how to support consumer spending and domestic electronics manufacturing.
The debate has intensified after a weak June quarter for smartphone shipments. Counterpoint Research said shipments fell 10% year on year in the April-to-June period, while IDC reported an 11.1% drop to 33.2 million units. The pressure has been most visible in the lower end of the market, where shipments of smartphones priced below ₹15,000 fell by 45% from a year earlier, as buyers delayed upgrades and component costs rose.
Industry sources cited by Trade Brains say higher memory and parts prices have already pushed handset costs up, with average smartphone prices rising about 15% since the end of the second quarter of 2026. A cut in GST would not remove those cost pressures, but it could trim the tax burden at the checkout, especially in budget and mid-range segments where small price changes can shape purchase decisions. On a phone with a pre-tax price of ₹30,000, moving from 18% GST to 5% would reduce the tax from ₹5,400 to ₹1,500.
The council is also expected to look at a wider set of reforms at its 57th meeting, including easier registration processes for larger businesses, automated cancellation procedures and possible changes to input tax credit rules under Section 17(5), according to ET Now and Moneycontrol. Still, any benefit to consumers would depend on how much of the tax saving handset companies pass through to retail prices. For now, the mobile-phone proposal remains under discussion rather than an approved change.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
