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Handset companies urge the government to rationalise GST on batteries

June 08, 2018

The Indian Cellular Association (ICA) has asked the government to rationalise taxes levied on batteries and issue a clarification that the goods and services tax (GST) on lithium-ion batteries used in smartphones and feature phones should be levied at 12 per cent, on par with the rate on parts used to make mobile phones.

According to the ICA, there is no revenue implication on this measure; but it will greatly ease the pain which Indian manufacturers are being subject to.

Earlier, the ICA had said that there is a tendency on the part of the revenue administration to deny the 12 per cent GST rate to batteries for manufacture of mobiles and 18 per cent for sale to the replacement market and put them all in the 28 per cent category. This is happening especially in imports, where integrated GST is levied at 28 per cent, even if the shipments are for manufacturing.

This results in interpretational challenges, hampers manufacturing supply chain significantly in the input tax credit system and impairs viability of low-margin production. It has asked for GST on rechargeable lithium-ion batteries to be reduced to 18 per cent from the current 28 per cent, in line with other batteries.


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