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Govt rakes in moolah via tax on cell phones
December, 12th 2006
If you buy a mobile phone worth Rs 4,000 today, you will be paying about 123 per cent of the cost of the mobile (which works out to Rs 4,942) as tax to the government over the next four years. 
 
At a macro level, the nearly 65 million handsets that have been sold this year will generate the government a revenue of about Rs 32,123 crore in the next four years. 
 
The basis of this calculation is simple. A study by the Indian Cellular Association (ICA) pegs the average selling price of a mobile phone in the country at Rs 4,000 and the average utility span of such a gadget at four years. 
 
An average bill per user of Rs 400 a month adds up to Rs 19,200 over the four-year utility span of a mobile phone. 
 
Now, service tax of 12.5 per cent on Rs 19,200 works out to Rs 2,350, and other revenues the government earns as access deficit charge, revenue share, and spectrum charge collectively add up to 13.5 per cent of Rs 19,200, which is Rs 2,592. 
 
Hence, a mobile user ends up paying Rs 4,942 to the government in four years. Multiply that with the number of users and you get the astronomical sum of Rs 32,123 crore 
 
The study makes it clear that the common man is bearing a hidden burden of 123 per cent on his mobile, the report says. 
 
The ICA feels that telecom services and products should be included in the consumer price index (CPI), as they will positively affect the rising figure. 
 
A mobile is an essential item now, used by even carpenters and auto drivers, and forms an important component of consumer spending. An updated construction of the CPI will show that the continuous fall in the prices of telecom products and services is having a beneficial impact on the otherwise rising CPI, the study adds.
 
 
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