Inspired by India’s GST reform, the GST 2.0 that came into effect on September 22, 2025 is a simplified tax regime of only two base rates: 5% and 18%, and one 40% rate for items of luxury and demerit without input tax credit. But how do smartphones figure into this brave, new tax world?
The New GST Regime: What’s Different?
The reform does away with the earlier four-slab tax structure (5%, 12%, 18% and 28%), which has now been replaced with:
- An essential and everyday item Merit Rate of 5%.
- An 18% Normal Rate for all other goods.
- A 40% rate for luxury or demerit goods, such as high-end cars, tobacco, and gambling services.
The clean-up, meant to improve transparency, increase affordability, and ease of compliance.
Handsets Under GST 2.0: No Change, Remains At 18% With the second phase of the Goods under Services Tax (GST) in practice since July 1, there were no new taxes or reduced taxes introduced on mobile handsets as well, leaving the total tax amount to 18 percent.
Yet contrary to the expectations of the industry, there is no relief from the tax on smartphones (both feature & high-end), which continues to remain at 18% as it was prior to the recent reforms.
ICEA had demanded earlier that the phones be treated as essentials under the lower slab of 5% GST, citing their utility for education, banking, government services, and digital inclusion. But the GST Council proved resilient, and didn’t reduce the tax rate on mobile phones in the latest round of modifications.
And Which Tech Products Are Getting Cheaper?
Though smartphones were not one of the categories to receive tax relief, the following electronic goods:
Products like ACs, TVs, refrigerators, dishwashers, monitors, and projectors have been moved from the 28% to the 18% slab.
- This cut is believed to result in a significant reduction in retail prices media reports suggest savings of Rs 1,500-2,500, more so in high-value appliances.
Why Smartphones Aren’t Getting Better and What’s Next
There are a number of reasons, say industry analysts and insiders:
- Indeed, GST reduction could boost demand for smartphones, especially in the sub-Rs 20,000 segment that has hit a plateau in the recent past. According to Counterpoint Research, even if the rate policy is dropped to 12%, sales could surge and affordability could improve as well.
- But some say just the opposite, they point out that premiumization is a trend and that (with phones priced over ₹30,000 currently accounting for over 30% of the market) the argument for describing smartphones as essential goods is weakened. So the 18% is still justified for the time being.
Neither do industry sources see much hope of movement in the short term, noting that the 18-percent standard rate is the consensus under the new regime.
Final Verdict: Smartphones Remain Unaffected by GST Reform
Category GST Rate Before Revamp GST Rate After Revamp Impact on Price
- Smartphones & Feature Phones – 18% No GST-related price change
- TVs, ACs, Refrigerators – 28% (higher tiers) 18% Likely price reductions
- Essential Goods (food, etc.) 12–18% or higher 5% Significant cost relief
In essence, while the GST 2.0 reform simplifies the tax regime and lowers rates for many daily-use items and appliances, smartphone buyers will not benefit from any price relief under these changes.
Conclusion
The GST 2.0 will come into effect from 22 September 2025 with rate slabs at 5%, 18% and 40%. Smartphones continue to be taxed at 18%, despite calls to cut rates from industry bodies. Other electronic items such as TVs and ACs are taxed down so, yay for them being cheaper. The verdict? There won’t be a GST-led price reduction, for the moment at least, of smartphones.
