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GST impact on smartphones
NEW DELHI: For
consumers used to buying smartphones online at much
cheaper rates than those prevailing in brick and mortar
retail stores, the party is somewhat over. Online prices
would still be lesser than retail stores but the gap has
shrunk post-July 1 due to the roll out of the goods and
services tax (GST) which has subsumed all the local
levies like VAT etc
For instance, prior to
July 1 iPhone 6 (32(GB) on Amazon was priced at Rs
26,000 against Rs 29,500 in retail stores in Delhi. Post
July 1 the price on Amazon has gone up to Rs 27,300,
while the same in retail stores continues to be at Rs
29,500.
The shrinkage in the gap
is because GST rate for mobile phones is uniform 12%
while earlier the VAT rates varied across states — from
a low of 5% in Karnataka and Tamil Nadu to a high of 14%
in states like Delhi, Uttar Pradesh, Rajasthan, and
Gujarat.
Taking advantage of this
variation, online players used to source phones from
states having lower VAT like Karnataka and Tamil Nadu
and supply to consumers in Delhi and other states where
the VAT was higher. According to Bipin Sapra, Indirect
Tax Partner at Ernst & Young, the tax arbitrage for
e-commerce companies against offline stores has gone
away with the implementation of GST.
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