Mobile phone handset companies seek rationalisation of GST on batteries

8 June 2018: Indian handset producers have urged the government to reconcile taxes levied on batteries and publish an explanation that the goods and services tax (GST) on lithium-ion batteries handled in smartphones and feature phones should be levied at 12%, on par with the rate on parts used to manufacture mobile phones.

It may be explained that 12% GST on parts for mobile manufacture comprises batteries, which are to be entered into the mobile. There is no revenue implication on this measure, but it will greatly expedite the pain which our producers are being subject to,” the Indian Cellular Association said in a report to revenue secretary Hasmukh Adhia dated June 6. A copy was seen by ET.

The organization had said previously that there is a “tendency” on the part of the revenue administration to deny the 12% rate to batteries for the production of mobiles and 18% for sale to the replacement market and put them in the 28% division. This is happening particularly in imports, where combined GST is queried to be levied at 28%, even if the shipments are for production, according to a letter sent by the association to the revenue secretary in April. In its newest letter, the association said that having three types of GST results in interpretational challenges breaks the manufacturing supply chain significantly in the input tax credit system and reduces the viability of low-margin generation. The organization asked for GST on rechargeable lithium-ion batteries to be reduced to 18% from 28% currently, in line with other batteries.