GST on Mobile Phones: Applicability, HSN Code and GST Rate

• Mobile phones in India are taxed at 18% GST, ensuring standardised pricing across all states.
• The HSN code for mobile phones is 8517, while accessories like batteries, power banks, and chargers have different classifications.
• Budget 2024 reduced basic customs duty from 20% to 15%, impacting the final cost of imported mobile devices.
• Businesses can avail of Input Tax Credit (ITC) on mobile phone purchases if used for commercial purposes.
• Although GST has eliminated state-wise VAT differences, the 18% tax has increased overall costs compared to the pre-GST regime.

The implementation of GST (Goods and Services Tax) has significantly impacted the pricing, taxation, and supply chain of mobile phones in India. As of 2025, mobile phones continue to attract an 18% GST rate , ensuring uniform taxation across the country.Additionally, import duties, input tax credits, and bundled supplies influence the overall cost structure.Let’s explore how GST affects mobile phones and accessories in 2025.

Under GST, mobile phones are subject to an 18% tax rate. This applies to all types of mobile devices, including feature phones, smartphones, and premium devices.

Mobile phones and most accessories fall under HSN Chapter 85, with 18% GST applicable. However, specific components used in manufacturing are taxed at 12% GST.

Before GST, mobile phones were taxed under Excise Duty and VAT (Value Added Tax), which varied across states, leading to price discrepancies. Under GST, the tax rate has been uniformly set at 18%, eliminating these inconsistencies.
Here’s how the cost structure changed post-GST:

Points to Note:

• Uniform Pricing: GST ensures a fixed tax rate nationwide, preventing tax variations.
• Tax-on-Tax Eliminated: Previously, excise duty was taxed on VAT. GST removes this cascading effect.
• Higher Tax Rate: While GST streamlined taxation, the 18% rate is higher than the earlier average VAT rate of 5%–14% , making phones costlier.

Also Read: Understanding the Impact of GST on Health Insurance: Changes in Rates and Policies

India is one of the world’s largest mobile phone markets, and a significant portion of mobile devices and components are imported. The customs duty structure plays a crucial role in determining the final retail price of mobile phones.The Budget 2025 introduced significant changes to import duties, focusing on enhancing affordability while strengthening domestic manufacturing. It is part of a broader effort to promote local manufacturing while making imported phones more affordable for consumers.As per the Budget 2025 announcement, the basic customs duty on several key mobile phone components has been scrapped, which will reduce costs for mobile brands importing these parts. This move aims to support local assembly and reduce the overall cost of mobile devices in the market. It is expected to benefit both consumers, by making phones more affordable, and manufacturers, by lowering production expenses.

The Union Budget 2025 reduced import duties on key smartphone components to make high-end devices more affordable and promote local manufacturing. This move balances consumer demand for premium brands while strengthening India’s domestic production capabilities. Encouraging Competition High import duties made globally popular brands like Apple and Samsung more expensive compared to locally assembled phones. Lowering BCD ensures better pricing parity. Supporting Consumers With an increasing demand for high-end devices, reducing BCD can help make flagship smartphones more accessible to Indian consumers. Global Trade Compliance India has trade commitments under WTO agreements and Free Trade Agreements (FTAs) that require it to maintain a balanced approach to import tariffs. Expected Impact of BCD Reduction

• Premium imported smartphones may see a price drop of 5-7%.
• Foreign brands may expand operations in India to capitalise on reduced tariffs.
• Domestic manufacturers still retain a pricing advantage due to incentives under the Production-Linked Incentive (PLI) scheme.

In the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced several measures to boost domestic lithium-ion battery production, essential for mobile phones and electric vehicles. The government has exempted customs duties on 28 additional capital goods used in manufacturing mobile phone batteries, aiming to reduce production costs and encourage local manufacturing.Additionally, the budget proposes a full exemption of Basic Customs Duty on cobalt powder, lithium-ion battery scrap, and other critical minerals. This initiative is designed to secure the availability of essential materials for domestic manufacturing, further supporting the growth of India's battery production industry.

Extending the duty exemption on mobile phones aims to make devices more affordable for consumers while boosting the growth of the domestic manufacturing sector. This move also helps foster innovation and supports India's push towards self-reliance in technology. Encouraging Local Battery Assembly While India doesn’t produce lithium-ion cells at scale, mobile brands like Xiaomi, Oppo, and Samsung assemble battery packs locally. Lowering input costs helps these companies remain competitive. Reducing Mobile Phone Prices Since batteries are a significant cost component, keeping lithium-ion cell imports duty-free ensures that overall mobile phone production costs remain stable. Supporting ‘Make in India’ Initiative The exemption provides temporary relief while the government works on boosting local lithium-ion battery production under schemes like the National Programme on Advanced Chemistry Cell (ACC) Battery Storage. Impact of the Duty Exemption Extension

• Mobile phone batteries remain affordable, ensuring stable smartphone prices.
• Encourages battery manufacturers to continue local assembly while India develops its lithium-ion cell production capacity.
• Reduces cost for mobile phone brands, benefiting both manufacturers and consumers.

When importing mobile phones, the Integrated Goods and Services Tax (IGST) is applied not just to the product cost but also to the customs duty levied on it. This means that the final price of an imported mobile phone is higher than just the sum of its base cost and BCD.

The formula for calculating IGST on imported mobile phones is:

• Total Value for IGST Calculation = (Cost of Phone + Insurance + Freight) + Basic Customs Duty (BCD)

Once this total value is determined, IGST (typically 18%) is applied to it.

Yes, businesses can claim Input Tax Credit (ITC) on mobile phones if the phone is used for business operations. Conditions for Claiming ITC on Mobile Phones:

• The invoice must mention GSTIN, company name, and address.
• The mobile phone must be used for business purposes.
• The seller must have filed GST returns and paid the tax.
• ITC cannot be claimed on personal mobile phone purchases.

In 2025, the landscape of mobile phone taxation in India remains dynamic, with challenges and opportunities for consumers, businesses, and manufacturers alike. While the 18% GST rate ensures uniformity in pricing across the country, the reduction in import duties and the extension of duty exemptions on key components like lithium-ion batteries offer significant relief to both consumers and domestic manufacturers.As the industry adapts to these changes, the impact on affordability, innovation, and local manufacturing will continue to evolve, strengthening India’s position in the global mobile phone market while promoting self-reliance in the technology sector. Also Read: GST Impact on Indian Economy