GST Impact on Consumer Electronics

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The consumer electronics market of our country is one of the largest in the world. Out of the total production of electronic goods in India, consumer electronics contribute a share of 23% produce. Consumer electronics is estimated to grow at CAGR or compound annual growth rate of 24%by the end of year 2020. The increase in the production and the consumption of the consumer electronics is due to the recent technological advancements and cost effectiveness. The government initiatives like setting up of more and more SEZ and FDI has also led to the increased growth in this sector. The industries of this sector are closely following GST news to get an idea of the offerings and changes.

After the advent of GST, along with many other sectors, consumer electronics will also be impacted. Let us find out what the GST news today has to say on this topic.

GST Impact on Consumer Electronics

As per the GST news, the GST council has set a 28% GST on the consumer durables. The tax component was 23% in the previous tax regime where the VAT component was between 12-14% and excise duty was around 8%. This is going to make the consumer durables like washing machine, mixers, toasters, fridge, AC, etc. expensive by 4-5%. This tax burden will be passed on to the consumers and they will have to shell out more from their pocket. The industry is expecting a crunch in the demand especially for the initial few days of the price hike. However, market news experts are hoping that things will get back to normal in the next quarter due to the festival season and also because most of these goods are unavoidable and people will not step back for a very long time from making the purchase.

The industry was eyeing for a tax slab of 18%. But after having realized that this sector has been put into the bracket of 28% which was much higher than their expectations, the industry stalwarts were quite disappointed. This will also largely impact the appliances that were made in excise free zones. The industry is also wondering how it will fight with old stocks, compliances and demand for increased cash flow. The trade partners may also suffer impact of input tax, the GST news today points out.

But in spite of this, the Indian electronics industry has welcome the new structure of the GST with both arms as this simplified tax structure for goods and services is going to be quite favoring in long run. Other than creating a better digital penetration, GST is also going to help consumer electronics industry by octroi removal (especially Mumbai where 5% octroy is levied) and lowering the warehouse and logistics cost which may neutralize the increase in tax slab.

GST news confirms the consumer goods like camera, speakers, computers are put in the slab of 18% making it marginally costly. Smartphones were levied with 13% which after GST, becomes 12% which is good news. Many clarifications are yet to come on the current tax exemptions or deductions as given by the different states. The industry may in a couple of months may again go for a price revision depending on ITC.

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