Cell phones may become costlier in Maharashtra

Most Commented

Unified Communication for your Biz

Improve your contact center performance. See how you can make a difference.

Watch Now

Reach the ICT Community

Engage and build your ICT audience with CIOL online advertising.

Know more

Cell phones may become costlier in Maharashtra

State government proposes to levy 12.5 per cent value-added-tax on mobile handsets

Pankaj Maru

Monday, June 08, 2009

Email This

Print This

Comments

RSS

MUMBAI, INDIA: The Maharashtra Government's proposal to raise the value-added-tax (VAT) from 4 per cent to12.5 per cent on the sale of mobile handsets has caused panic in the mobile phone market in the State. The proposal was made last week during the ongoing budget session of the State Assembly.

Though the final decision on the proposal is yet to be made, there's a growing fear among the retail industry that the move to hike VAT will decline the legal sale of handsets and could lead to grey marketing. And this will naturally have a negative impact on the tax revenue front too.

According to Kumar Rajagopalan, CEO of Retailers Association of India (RAI), this decision is unfortunate for Maharashtra state and also for the general public.

"If the rest of India is having 4 per cent VAT and if Maharashtra is imposing 12.5 per cent on mobile phones, then the public will not buy the genuine mobile handsets with IMEI number from local market or retail stores. They will buy the phones from other states or ask their relatives or friends to buy for them from other places," Rajagopalan told CyberMedia News.

"It will create situation that existed about 4-5 years back, where about 90 per cent of the mobile market was grey and only about 10 per cent was official. And again, it will encourage grey marketing in the state as mobile phone costs will rise with hike in VAT," Rajagopalan said.

He said this will affect the market revenue and the customers opting for the grey market will not get benefits like service support or product warranty and other benefits.

"Why can't we have an equitable sales tax structure across India? And if, Maharashtra state wish to have its own unique tax structure then it will certainly hamper the retail business of mobile handsets," Rajagopalan reacted.

However, the Indian Cellular Association (ICA) is optimistic on this issue. "We have discussed this issue with the Maharashtra government and have tried to explain the business impacts of the proposed hike in VAT. We hope that they will not implement the tax proposal and could withdraw it," said Pankaj Mohindroo, ICA's national president.

According to Vinnie Mehta, the executive director of Manufacturers' Association for Information Technology (MAIT), mobile phones are no longer luxury items; today they are considered very essential communication tool for the common man.

"With convergence happening, the boundary between computer devices and mobile phones is slowly diminishing. While computers are still a bit complex, mobiles have been simple and easy to use by people. And so taxing such useful device could impact the economically challenged people like students and could impend the growth for common people," Mehta viewed.

Do you think it is justified on the part of Maharashtra Government to present such proposal while the entire world is taking about bridging the digital divide?

©CyberMedia News

Would you like to on this article?

Read Comments

VLSI Training said on 6/15/2009 8:58:35 AM:
This move will prove counter productive to the Maharashtra government. As the article rightly mentions people will move to grey market which will reduce the revenue for the government significantly. I hope Government listens to ICA and public and abandon this move to increase the VAT to 12.5% VLSI Training, www.iivdt.com

to VLSI Training

Archana said on 6/10/2009 12:56:25 PM:
Cell phones may become costlier in Maharashtra it is not good news. Maharashtra government proposes to levy 12.5 % value added tax on mobile handsets. In this world cell phone is important instrument for communication.

to Archana

Niraj said on 6/10/2009 10:22:16 AM:
I think in “MAHARASHTRA” cell phone may become costlier. It is possible Because of back five-six month shares market is down. Shares market hit all type of markets.

to Niraj

aarti said on 6/10/2009 10:14:19 AM:
Cell phone may become costlier in Maharashtra. Its bad news……… The Proposal was made last week during the ongoing budget session of the State Assembly…..And this will naturally have a negative impact on the tax revenue front too.

to aarti

sandeep said on 6/9/2009 3:17:30 PM:
This is bad news because mobile is very important media to telecommunication. So Maharastra government cell phone not This is bad news because mobile is very important media to telecommunication so Maharastra government

to sandeep

Name
Email
Your reply

Intuit Money Manager set to make India debut

Is China speaking English to beat Indian IT?

Obama visit arouses mistrust among China netizens

I have never used Twitter: Obama

Satyam rejects Rs 1230-cr claims from 37 firms

Chandigarh cyber cafes raided

Product recall will strengthen brand Nokia

Mobile number portability from Dec 31

Delta launches new UPS series 'NH Plus'

Facebook grew by 1,840 p.c in a year

	Simplify Business Management. ERP solutions by IBM
	Carry your Dream, Convey your Value with ZTE
	A fault tolerant server to reduce your TCO

	A must attend event for IT Professionals
	How to make your enterprise productive
	Unified Communication can impact business. Know how

	Making Web3.0 a Reality!
	CIOL Enterprise Next :What's NEXT in IT? :
	Decrease Total System Costs With Cyclone IV FPGAs

	Reach your desired Target Audience and realize high ROI
	Effective ways of Customer Acquisition through Demand Generation
	Reach 2,500 potential Enterprise Customers!