GST 2.0: How New GST Rates Are Impacting Mobile Phone Prices

The Goods and Services Tax (GST) system in India recently underwent a significant overhaul, termed GST 2.0, aiming to simplify tax structures and drive economic growth. GST substituted various indirect taxes with one tax, although it is important to make periodic improvements so that the taxation system remains efficient and easy to understand for the consumers.

Although this revamp will bring relief to various basic and consumer electronics products, the effect on mobile phones, one of the most important consumer segments in India, is subtle. This post examines whether GST 2.0 has changed mobile phone costs in India, the rationale behind the taxation, and what’s next for consumers and manufacturers.

General Summary of GST 2.0 and New Tax Slabs

The GST council stated on the 22nd of September, 2025, that the GST slabs are to be rationalized, leaving behind the previously existing four tax slabs as only two major tax slabs of 5 percent and 18 percent. A special 40% slab remains applicable for luxury and demerit goods.

The rationale behind this simplification is threefold: to ease compliance, boost consumption of key goods, and support India’s manufacturing and export sectors.

• The 5 percent slab primarily includes necessities and fundamental commodities such as processed foods, some medicines, and renewable energy equipment.

• The 18% slab will be applicable to most consumer durable goods, electronics, and standard goods.

• Luxury goods such as premium cars and demerit goods like tobacco and online gambling fall under the 40% tax slab.

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GST 2.0 and Mobile Phones: Will Tax Rates Change?

Despite the overall GST 2.0 changes, the most notable point for mobile phones is that their GST rate has remained unchanged compared to before the restructure. In other words, the taxation on smartphones and feature phones has not increased or decreased

Mobile phones and laptops continue to be taxed at 18%, unlike televisions, air conditioners, and refrigerators that have seen their GST reduced from 28% to 18%. Accessories such as chargers, earphones, batteries, and phone cases also stay in the 18% bracket.

Mobile Phones and GST 2.0: No Change, Here’s Why

There were strong appeals from the India Cellular and Electronics Association (ICEA) and other industry bodies to reduce the rate to 5% to treat mobile phones as essential digital tools. ICEA emphasized that mobile phones are essential tools for education, access to public services, financial inclusion, and, in India’s case, a key driver of the digital economy.

The GST Council had to balance revenue needs with affordability. Since the mobile phone segment contributes significantly to government tax collections and the broader economy, a rate cut could have risked revenue loss and fiscal stability.

For now, mobile phones remain taxed at 18% as ordinary goods, and the government maintains that the industry has continued to thrive under this structure.

As a result, the consumer prices of mobile phones will not decrease post GST 2.0. Unlike other gadgets that may see price drops, smartphones are unlikely to get any GST-driven discounts or promotions

This also means:

• The fall in prices of computers, automobiles, refrigerators, and washing machines because of the GST reduction will not be transferred to mobile phones.

• Since there are no tax cuts on mobile phones, manufacturers and sellers have no savings to pass on to customers

In effect, price stability rather than tax reform relief will be felt by consumers planning to buy mobile phones during and beyond the implementation of GST 2.0.

The Market Context: Indian Mobile Phone Industry

India is now the second-largest manufacturer of mobile phones in the world, with domestic production increasing dramatically to over 5.45 lakh crore in FY25 as compared to the previous 18,900 crore in FY15. Export has hit around 2 lakh crore with the government’s efforts, such as Make in India and production incentive plans.

Since mobile phones sold locally are produced in India, which stands at about 99.5 percent, it would be essential to develop a healthy local demand. On the home front, consumer affordability issues are strong, and they partly rely on taxation policies such as the GST rate, although the production ability of the industry and its export power are high.

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What About Mobile Accessories Under GST 2.0?

GST on mobile phones remains unchanged, and mobile accessories will also continue to be taxed at 18% under GST 2.0. This includes

• Chargers

• Earphones and headphones

• Li-ion batteries and power banks.

• Memory cards

• Tempered glass and plastic screen covers, which are protective.

• Phone cases and covers

The accessory market remains taxed uniformly to simplify compliance and tax administration without major rate fluctuations.

What This Means for Consumers and Sellers

For consumers:

• The new GST regime does not bring about any immediate downward movement in the prices of mobile phones.

• Discounts on festive or promotional items will still be possible but will not depend on the GST changes.

To sellers and manufacturers:

• The stable GST rate ensures predictable tax costs.

• There is no room to push cheaper retail prices by means of GST change.

• It is concentrated on innovation, features, and financing to lure buyers.

GST 2.0 and Used Mobile Phones: Tax Impact and Market Insights

For mobile phones—both new and used—the GST rate remains at 18%. This uniform taxation on used mobile phones has notable implications for buyers, sellers, and the resale market.

The tax rate of 18 percent in GST is imposed by the same tax on the sale of secondhand mobile phones as on new ones in India. This amount of tax is computed on the amount of the transaction or the sale price of the used device.

For example, if a used phone is sold for ₹10,000, GST at 18% would apply—meaning the buyer pays an additional ₹1,800 as tax.

GST Structure of the Used Mobile Phones

Intrastate Sales

In the case of intrastate sales, GST is divided into Central GST (CGST) and State GST (SGST), with each being 9 percent.

Interstate Sales

In the case of interstate sales, 18 percent (IGST) will apply.

Compliance of Seller in the Market of Used Phones

Even in the sale of second-hand mobile phones, sellers must issue a GST invoice, ensuring that the government continues to collect tax revenue.

GST on Mobile Phones: The Road Ahead

There is still an argument on whether mobile phones should be made cheaper through GST reductions. This may be re-examined in future GST Council meetings as:-

• Digital access gains more importance in social and economic development.

• The government harmonizes fiscal collection targets and social benefit needs.

• The stakeholders of the industry are still lobbying to have the tax rate reduced.

In the meantime, consumers and investors should watch for market shifts and any new announcements from the government.

Final Thoughts

GST 2.0 has brought welcome tax reform in India by simplifying GST slabs to two, focusing on easing the tax burden on essentials and standard goods. As much as consumer electronics enjoyed the GST cut, mobile phones continue to receive an 18 percent tax, since they are viewed as normal commodities and not necessities according to the new legislation.

This implies that the new GST reforms do not equate to lower prices of mobile phones for the Indian consumers. As mobile phones remain central to India’s digital future, there is hope that future reforms may focus on making them more affordable.

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