With reducation in VAT to 5 per cent, cellphone accessories to become cheaper
April, 06th 2016
The Andhra Pradesh government has proposed to bring parity in tax imposed on mobile phones and their accessories and parts in the State.
The Commercial Taxes department has given its approval to the proposal, as at present the VAT on mobile phones is at 5 per cent while it is 14.5 per cent on accessories and parts of mobile phones. It agreed to the suggestion that there should be no differential tax rate between mobile phones and their accessories.
Neighbouring States, including Telangana, brought down VAT on mobile accessories to 5 per cent, but consumers in Andhra Pradesh continue to pay more for the same branded accessories. It has been brought to the notice of the department that the higher VAT on mobile phone accessories made many customers buy from the grey market or purchase them directly from dealers in other States, resulting in trade diversion from the registered dealers.
With the government encouraging mobile phone manufacturers to set up their units in the State, it was suggested that the VAT on mobile phone accessories and parts be brought down to 5 per cent from 14.5 per cent to give them a level playing field and compete in other markets.
The proposal to reduce VAT will be submitted to the Finance Minister Yanamala Ramakrishnudu in a couple of days and then forwarded to the Chief Minister for his approval, they said.