Telecom bodies demand lower tax for mobile phones and services
In its latest appeal, ICEA called mobile phones and their components’ categorisation under the 18 per cent GST slab “regressive
| Photo Credit:
mihailomilovanovic
India’s telecom stakeholders are demanding that the government slash GST rates on mobile phones from 18 to 5 per cent, contending that phones have now become essential infrastructure rather than luxury goods in the country’s digital economy.
“The mobile phone is no longer aspirational; it is essential digital infrastructure for education, healthcare, financial inclusion, and governance. It should rightly be taxed at 5 per cent GST, in line with the Prime Minister’s GST reform agenda and his vision of a $500 billion electronics ecosystem,” said Pankaj Mohindroo, Chairman at the India Cellular & Electronics Association (ICEA) in a statement.
Since the last budget, telecom industry bodies, including the Cellular Operators Association in India (COAI), have been urging the central government to reconsider the taxes levied upon the sector.
“During the Independence Day speech, Prime Minister Narendra Modi announced plans to restructure GST tax rates by Deepavali, giving the sector a fresh chance to switch tax slabs. Lowering the tax rate to 5 per cent will have a huge impact on the price of handsets for consumers,” said telecom expert Parag Kar.
In its latest appeal, ICEA called mobile phones and their components’ categorisation under the 18 per cent GST slab “regressive.” It pointed out that the sector generates over ₹2 lakh crore in exports, making India the second-largest mobile phone manufacturer. However, the current 18 per cent tax rate weakens the sector’s domestic market performance, said the ICEA. It argued the rate hurt affordability, slowed replacement cycles and severely impacted volume growth.
On the other hand, placing mobile phones in the 5 per cent slab also goes in line with the estimates made by the Fitment Committee in 2017, said Mohindroo. In the pre-GST era, most states consciously capped VAT on mobile phones at 5 per cent, recognising them as essential goods.
Mahesh Uppal, Director of Com First (India), also agreed that mobile phones are no longer a luxury but an essential tool for conducting personal, social and work lives. However, he added, “It might be an exaggeration to consider them as necessary for survival, as, say, food, water, etc. I think the appropriate GST rate must reflect both these realities and should be somewhere between the two extremes of 5 and 18 per cent.”
Meanwhile, a tax expert dismissed the argument, stating that by no stretch of imagination can mobile phones be considered an essential item, at least as per the way essential goods are understood under the GST law.
“By essential goods, the government refers to goods required to survive. Now, while many people cannot survive without phones today, it does not come under the GST definition. No other country considers phones or telecom goods as essential goods. If every goods and service becomes 5 percent where will exchequer will go for revenue?” said the expert.
The ICEA also pointed out that correcting GST on mobile phones will deliver a double dividend by easing the burden on consumers, while directly sustaining India’s manufacturing base. Affordable devices will broaden access for students, households, and rural users, while rising domestic demand will anchor production growth.
As per government data, around 96.8 per cent of people in rural areas between 15-29 years use mobile phones at least once in three months for making personal calls and/ or accessing the internet. In urban areas, mobile phone usage is estimated at 97.6 per cent.
Published on August 19, 2025
