The Goods and Services Tax (GST) on smartphones priced below Rs 25,000 should be reduced from the current 18% to 5%, while the existing 18% rate may be retained for premium devices, according to a white paper jointly released by Grant Thornton Bharat and the Policy Watch India Foundation (PWIF) on Wednesday.
The report calls for a review of the GST framework for affordable smartphones, arguing that the existing uniform tax rate no longer reflects the critical role smartphones play in India’s digital economy. It recommends a differentiated GST structure to make smartphones more affordable for first-time buyers and price-sensitive consumers, while advancing the government’s Digital India, financial inclusion and electronics manufacturing goals.
The study notes that applying the same GST rate to both entry-level and premium smartphones disproportionately impacts lower-income consumers, limiting access to digital services. It argues that affordable smartphones have become an essential gateway to education, banking, healthcare and government services rather than discretionary consumer products.
According to the report, smartphones priced below Rs 25,000 account for nearly two-thirds of India’s handset shipments and are primarily purchased by first-time users, rural households, women, students and lower-income consumers. It also points out that around 350 million Indians still use feature phones, highlighting affordability as a major barrier to digital inclusion.
The white paper further states that India imposes one of the highest indirect tax rates on smartphones among major electronics manufacturing economies. In contrast, countries such as Vietnam, Thailand, Indonesia and Malaysia have adopted lower tax structures that encourage wider smartphone adoption while supporting domestic manufacturing competitiveness.
The report concludes that lowering GST on affordable smartphones should be viewed not as a tax concession for the electronics industry but as a strategic policy measure aligned with India’s digital transformation, manufacturing ambitions and long-term economic growth.
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