A GST drop for a number of consumer products is allegedly in the works amid ongoing discussions on rate rationalization. However, manufacturers of smartphones do not anticipate significant changes to their current GST rate structure.
Earlier Industry sources also predicted that the Government would not change the tax on smartphones.
“Had there been a conversation around a 12% slab being in place instead of an 18% slab, we still would have hoped for some relief; however, we are not aware of any change yet,” says a key industry player.
The GST Council, led by Finance Minister Nirmala Sitharaman, started a two-day meeting in New Delhi on Wednesday to talk about tax breaks for most goods. There are rumors that the rate decrease announcement will be made on Thursday night. In addition to rate reductions, the Council is expected to have deliberated on the ministry’s three-pillar reform plan, which focuses on structural adjustments and promoting ease of doing business.
The India Cellular and Electronics Association (ICEA), which argues that phones are necessary products and the primary means of digital access for more than 90 crore Indians, had requested the government to lower the GST on mobile phones and related components from 18% to 5% in the impending changes. In 2020, the GST rate for phones increased from 12% to 18%. According to ICEA, prior to GST, the majority of states maintained mobile phones within the category of essential commodities, subject to a 5% VAT.
India’s GST Gets a Makeover: Simpler Slabs
In a landmark move to simplify India’s tax regime, the GST Council has approved sweeping reforms that will take effect from September 22, 2025. The overhaul trims the complex multi-slab system down to just two primary rates 5% and 18% and introduces a 40% sin tax for super luxury and harmful goods.
🔍 What’s Changing?
✅ Only Two Slabs Remain
- 5%: For essentials and daily-use items
- 18%: For aspirational and mid-range goods
- 40% Sin Tax: For tobacco, carbonated drinks, large vehicles, and other luxury items
📉 Slabs Removed
- 12% and 28%: Eliminated due to low revenue contribution and complexity
🛍️ What Gets Cheaper?
| Category | Examples | New GST Rate |
|---|---|---|
| Essentials | Food, toiletries, dairy, pasta, school supplies | 5% |
| Health | Life & health insurance, anti-cancer drugs, thermometers | Exempt / 5% |
| Agriculture | Farm tools, green energy items | 5% |
| Vehicles | Small cars (≤1200cc petrol / ≤1500cc diesel), bikes ≤350cc | 18% (was 28%) |
💸 What Gets Costlier?
| Category | Examples | New GST Rate |
|---|---|---|
| Sin Goods | Tobacco, sugary drinks | 40% |
| Luxury Vehicles | Cars & bikes >350cc | 40% |
| Premium Items | Large appliances, high-end electronics | 40% |
📊 Why the Shift?
- Over 67% of GST revenue came from the 18% slab over 8 years
- The 12% slab contributed just 5%, making it inefficient
- Reform aims to boost consumption, ease compliance, and increase transparency
🗣️ Voices from the Top
Finance Minister Nirmala Sitharaman called the reforms “multi-sectoral and multi-thematic,” designed to enhance both ease of living and ease of doing business.
Prime Minister Narendra Modi hailed the move as “Next-Generation GST Reforms,” emphasizing its benefits for the common man, farmers, and small traders.
🕰️ GST Timeline Snapshot
- 2017: GST launched with 5 slabs
- 2025: Streamlined to 2 slabs + sin tax
- Total GST revenue in 2020–21: ₹11.37 lakh crore
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