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GST

GST can be said as a historical landmark in India’s financial policy also a big victory for the current Government.

The much discussed, debated and awaited Goods and Services Tax Bill or GST got Rajya Sabha’s approval. GST is all set to pave the way for a new economic future for India.TO decide the taxes on goods and services the center and the state will work together this time. Several states have suggested that the GST rate should be over 20% to minimize revenue losses. The proposed tax rate is 18%, if that number is to be believed, or is taken as any sort of ballpark figure for the GST rate, it may drastically alter our tech lives.

So, what will happen to the price of smartphones or other gadgets. Will buying from eCommerce sites like Flipkart, Amazon, Snapdeal will get more expensive? What will happen to the prices of consumer electronics like televisions and refrigerators? Will GST give good reason for international manufacturers to enter India? As the country moves towards a unified tax regime, we try to answer some of these pertinent questions, answers to which will end up impacting all our tech buying decisions in the near future.

Smartphones, Tablets, Laptops

GST

GST is expected to get rid of the country’s complicated tax regime, which will result for the cost of consume electronics to come down, given that additional state taxes such as entry, octroi, etc will be done away with. It will not be the case for imported smartphones and tablets. Currently Duty and VAT for imported smartphones comes around to 12.5% to 12.8%. If the GST rate is at 18%, it will naturally increase the cost imported smartphones. If the 18% GST rates are implemented, a Rs.10000 smartphone will cost Rs.11800 and a Rs.20000 smartphone will cost Rs.23000. In short the imported smartphones like iPhones will become more expensive. But If the company decide to manufacture iPhones in India, its prices will go down, which is a near possibility.

According to Anshul Gupta, Research Director at Gartner, “There are certainly some benefits for things that are manufactured in India. Those items are going to be cheaper because they (manufacturers) will eventually be paying taxes only on the value which has been added in their factories.”

There is another thought that the smartphones prices may come down. GTS will help the manufacturers to cut the cost in logistics and will benefit from consolidating their warehouses. As Jason Kothari, CEO, Housing.com says, “the immediate benefits of the GST are expected to go to segments like logistics and warehousing, and retail.” Some analysts also predict that this cost saving may be passed down to the end consumers.

It will only become clearer once the provisions of the GST law are put to the GST council.

Using Smartphones

GST

Owning a smartphone will get expensive, the phone bills are expected to shoot up as the current tax on these services are at 15%.

Rajan Mathews, Director General, COAI (Cellular Operators Association of India), says, “The industry welcomes and celebrates this iconic reform, while urging the government to ensure that the rate applied for the telecom services should be no more than the existing 15% to meet the government’s vision of a connected digital India and ensuring affordable services.” He further added, “this paradigm shift in India’s indirect tax regime must play an enabling role in the growth of key sectors like telecommunications. There are certain aspects relevant for the telecom sector that would need to be considered by the policy makers while finalizing the GST legislation.

An ASSOCHAM-KPMG paper dated July 24 states, “The telecom industry has impressed upon the government to come out with a clear cut position with regard to levy of taxes on Value Added Services (VAS) even as the firms across the entire value chain look forward to a smooth transition to much awaited GST.” The industry body goes on to add, “Certain VAS such as ringtones are regarded as entertainment under certain states’ entertainment tax laws and are therefore subject to taxation. Since the service tax is also liable on the revenue generated from rendering such services, there is a dual levy in the form of service tax and entertainment tax”.

This means the price of certain Value added Services will go up.

Televisions: Buying & Watching

GST

Good news! GST at 18% is expected to get price cut on televisions, which currently bear taxes at 25%. SO the LED TVs will cost less with the GST. GST is also expected to reduce the DTH bills as GST will lower the tax by 2%-5% for media companies. It will also affect the film producers and multiplexes, which in turn could bring down the cost of movie tickets as well.

Ecommerce

GST

Currently different states have different entry taxes in India. GST is expected to make things simpler for eCommerce players. On the other hand, sellers will have to pay less, and it will result in discounts and special offers.  you may no longer get the cost benefit from eCommerce companies, but you can expect faster shipping and lower delivery prices. So will eCommerce products eventually cost more than those in offline stores? As per Gartner’s Anshul Gupta, “people are saying that costs will go up because some of these eCommerce channels were actually avoiding taxes. Now these eCommerce channels will come under GST. All the goods and services which are sold through e-portals will attract taxes.

The biggest tax reform since Indian Independence, GST will  be in effect from April 1, 2017.

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