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Karnataka
Plea against hike in VAT on cell phones
Our Bureau
Bangalore April 4
The hike in VAT on cell phones from 4 to 12.5 per cent will see widespread grey trade again in the State, the industry has warned.
The Government of India had classified some electronic items as IT products, and reduced tax rates on them for the benefit of the IT industry.
The State Government, during the Budget revision, removed certain electronic goods including cell phones, cordless phones and headphones from the list of IT products taxable at 4 per cent VAT rate.
Hike in prices
This move by the Government implied a hike in prices of mobile phones, to be taxed at 12.5 per cent VAT with effect from April 1.
The list of goods that saw a hike in VAT to 12.5 per cent in the State included mobile phones, answering machines, speakers, headphones, cordless handsets, amateur radio equipment, and switches.
Calling the move the result of `oversight' by the government, Mr Pankaj Mohindroo, President, Indian Cellular Association (ICA), said the industry was in talks with the government to roll back the tax rate.
Speaking to Business Line, Mr Mohindroo predicted that if VAT was not revised to 4 per cent, the Karnataka market would be `wiped out'.
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