GST bill passed: How will it affect technology and e-commerce industry in India?

The GST bill has finally cleared its biggest hurdle and secured unanimous approval in the Indian Parliament. In a rare show of consensus, the ruling and the opposition were on the same wavelength. The bill will now be cleared by the state assemblies before it will be sent to the President for approval. The bill seeks to rationalize the tax regimen uniformly across the nation regardless of state boundaries. It is time to see how much the new tax regime will affect the prices of the commodities especially the tech sector. How will it affect the prices of computers, mobile phones, television sets, gaming consoles and the washing machine?

It was the dream of many economists to have one tax, one nation tax regime. It has been touted as the biggest tax reform since 1947 when the nation was born. It will have profound ramification on the economy of the country and for the first time, the federal government and the state will work together to decide taxes on goods and services. If the government can set 18% as the benchmark for taxes under the new regime, it could drastically affect our tech lives.

The 18% tax mark could drastically affect our technology industry

So how much more or less will you pay for a Smartphone? Will products get expensive when you buy from e-tailers? Will it open the doors for international device manufacturers in India? Let us find answers to these questions.

It is expected that the prices of electronics will come down once the GST regime is applied all over the nation uniformly. The new regimen will do away with the plethora of taxes like entry, octroi, etc. However, goods like smartphones, tablets, and laptops will not see much of a difference. In present times Duty and VAT for imported smartphones come around to 12.5% to 12.8%. However, if 18% GST bill is applied to them, it will be surely up the prices of these goods.

The smartphone prices are going shoot up

The prices of mobile devices were already set to increase, post the duty rearrangement in the 2016-17 Budget. So for a smartphone which costs Rs. 10,000 the price post the application of GST will become Rs. 11,800. A smartphone in the premium range which costs Rs. 20,000 will become Rs. 23,600. Hence premium smartphones like iPhone and Galaxy Note will see a steep increase in price. However, the price will fall considerably if these devices are made in India.

It will be better for the government to keep the present tax structure intact for the electronics industry to encourage local manufacture which will be much cheaper than the imported ones.