GST Council may lower mobile phone tax as demand weakens

The Goods and Services Tax (GST) Council may consider reducing the 18 per cent tax on mobile phones at its September 12 meeting.

The proposed rate cut comes amid a slowdown in mobile handset demand.

The Council is scheduled to meet after a gap of 374 days. Unlike its previous meeting, which focused largely on GST rate rationalisation, the upcoming session is expected to give greater attention to easing compliance for businesses.

GST compliance reforms likely to dominate meeting

Besides the mobile phone tax proposal, the Council is expected to examine several issues linked to GST compliance and input tax credit.

One major concern is the inverted duty structure, where the GST paid on inputs is higher than the tax charged on the final product.

The Council may also consider measures to protect genuine buyers who lose input tax credit when suppliers subsequently fail to pay their tax liabilities.

Another proposal involves greater automation in GST administration. Refund processing could move towards a risk-based automated system using GSTN and e-invoicing data.

Compensation Cess also on agenda

The accumulated Compensation Cess may also require attention.

The September 12 GST Council meeting is therefore expected to consider both the mobile phone GST rate and wider changes aimed at simplifying compliance, unlocking working capital and reducing recurring tax disputes.