A large part of my day is spent answering client queries and understanding policy changes. One question I have been hearing repeatedly over the past few days is: “Will GST on mobile phones be reduced again?” From the perspective of both a mobile tech experta and a common consumer, this is not just a matter of tax rates, but a topic that is directly linked to the country’s 90 crore+ smartphone users, manufacturers, and the government’s revenue policy.
Currently, the GST rate on mobile phones is 18%. This rate was implemented in April 2020, when it was increased from 12% to 18%. The main reason for this increase was to correct the ‘inverted duty structure’. In simple words, at that time, the tax on finished mobile phones (12%) was lower than the tax on its components (18% on some). This prevented manufacturers from getting their full input tax credit (ITC), increasing their costs and causing a loss of revenue to the government. The 18% rate corrected this imbalance, but it had a direct impact on the pockets of consumers. The price of a phone worth Rs 10,000 suddenly increased.
But now, five years later, intense discussions have started again. In August 2025, Prime Minister Narendra Modi has announced ‘GST 2.0’, which aims to simplify the tax slabs. The proposal is to reduce the existing multiple slabs of 5%, 12%, 18% and 28% to mainly two slabs of just 5% and 18%. Now the biggest question is, in which of these categories will mobile phones be placed?
Industry organizations like the India Cellular and Electronics Association (ICEA) have been constantly arguing that mobile phones have now become an ‘essential item’. It is the primary means of education, health, banking, employment and digital payments. In such a situation, it is not appropriate to consider it a luxury item and keep it in the 18% slab. Their demand is that it should be included in the lower slab of 5%. This will not only provide relief to the common man, but will also strengthen the ‘Make in India’ initiative and promote mobile manufacturing in the country.
Let us understand the impact of this change on consumers with an example. Suppose you buy a mobile phone worth Rs 10,000 today. This price includes 18% GST. This means that the original price of the phone (without tax) is around Rs 8,474 and you are paying Rs 1,526 as tax. If GST is reduced to 5%, then the tax on the same basic price will be only Rs 424. In this way, your expenditure at the phone shop will be around Rs 8,898. That is, you can save about Rs 1,100. This saving can be a big decision for crores of people shopping in the budget and mid-range segment.
If the same 5% GST slab is applied to flagship phones as well then a user if buy iPhone 16 (128GB) model then he can easily save around Rs 8200. The final cost of iPhone 16 having 5% GST will drop from ₹74,499 to Rs 66,499!
However, the challenge before the government is to maintain the balance of revenue. The tax revenue from the mobile sector is a huge figure. In such a situation, the decision to reduce it suddenly is not easy. The final discussion and decision on this is expected in the GST Council meeting to be held in September 2025.
An important thing for businesses is that Input Tax Credit (ITC) can be claimed on mobile phones purchased for commercial use, whether the tax rate is 18% or 5%. Therefore, its direct financial impact on companies can be managed through ITC.
Finally, as an tech advisor, I suggest that if you are planning to buy a new mobile phone in coming months, it may be wise to wait a bit. The results of the GST Council meeting to be held in the month of September can save you thousands of rupees. Apart from this, always keep an eye on notifications from official sources, such as the Ministry of Finance or the GST Council, so that you do not fall prey to any rumor. This change in tax can not only be heavy on your purse, but will also determine the direction of the country’s digital economy.
