According to reports, the prices of smartphones in India are expected see an increase of more than seven percent with the implementation of the new GST bill.
The Goods and Service Tax (GST) bill which proposes a national Value added Tax to be imposed in India from 1 April 2017, is of utmost significance as the biggest reformation of indirect tax structure in India over the last two decades. It proposes to be a comprehensive indirect tax on the manufacture, sale, and consumption of goods and services throughout the country which will replace taxes levied by the central and state government.
According to official statements, the amalgamation of several central and state taxes into a single tax would help alleviate existing distortions in taxation, thereby facilitating a common national market.
However, this method of taxation has invited several concerns from experts as it is expected to have a direct effect on the country’s consumers in several ways. One of them may be in the form of an increase in the price of consumer goods, including mobile phones.
Coolpad India CEO Syed Tajuddin was reported as saying, “Depending on the rate of GST, prices could go up 7-8%”. While the new GST rate has not been announced as of now, the matter has already raised eyebrows among several mobile phone manufacturers. It is being anticipated that the implementation of the new system may result in putting an end to concessions currently being offered by various states.
But on the flip side, the GST may lead to a “big jump” in the sales of the mobile phones on e-commerce platforms, which has seen a decline over the last few months due to the levying of additional taxes by some states. Tajuddin cited this as a major reason for Coolpad to see a significant reduction in its annual sales target, which was formerly expected to be around 4 million units, to around 2.5-3 million units this year. To combat the situation, the company is engaging in deals with online partners like Amazon in India, which will serve as exclusive sales platforms for some of their devices.
In order to boost their offline sales, Coolpad is working on a pilot since last month with Amazon India for supplying products to retailers. “Both Coolpad and Amazon.in have invested in the pilot and once we have the results around September, we will decide on the future course,” Tajuddin added.