treeviewIs it possible to claim GST on mobile phones?
Yes, under certain situations, GST on mobile phones can be claimed. But, before we get into who may claim and how to claim, let’s review some fundamental terminologies to understand the topic better.
What is GST?
The Goods and Services Tax (GST) is an indirect tax that has replaced all government and state taxes in India, including excise duty, VAT, services tax, and so on. GST is tax on value add at each level rather than the total value of the goods or services bill at each stage.
The taxes paid at each level will be reimburse in the following value creation stage. Thus, the Goods and Services Tax levied by the seller or service provider (final dealer) is the final tax incurred by the client.
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This shows that the tax paid by each of them may be offset against their tax liability on production. Thus this contributes to eliminating the tax cascade effect in the previous indirect tax system.
Who is eligible for ITC?
Only if the following requirements are satisfy may a person registered for GST get an input Tax Credit. And, sure, the ITC would cover mobile phones/laptops because they are utilize in business.
Who is eligible to get ITC?
A person registered for GST may claim Input Tax Credit only if the following requirements are satisfied. And, yes, mobile phones/laptops are cover by the ITC since they are utilize during the business.
- The phone should be purchase for professional use.
- Thus the dealer should give a tax invoice that includes their company name, address, GST number, phone HSN number, GST tax rate, GST amount charged, and the buyer’s business name, address, GST number, and phone HSN number.
- The aforementioned mobile gadget has been deliver.
- GST returns submitted by suppliers
- The provider has paid the applicable government tax.
- If the phone was purchase in installments, ITC can be claimed only after receiving the last lot.
How can I apply for ITC?
All taxpayers are require to provide the amount of their input tax credit in their monthly GST reports on Form GSTR-3B. The table below summarises the qualifying ITC, ineligible ITC, and ITC reversed throughout the tax period.
| Details | Integrated Tax (IT) | Central Tax (CT) | State or UT Tax | Cess |
| 1 | 2 | 3 | 4 | 5 |
| (A) ITC available (full or part) | ||||
| (1) Import of Goods | ||||
| (2) Import of Services | ||||
| (3) Inward supplies | ||||
| (4) Inward supplies from ISD | ||||
| (5) All other ITC | ||||
| (B) ITC reversed | ||||
| (1) According to 42 & 43 of CGST Rules | ||||
| (2) Others | ||||
| (C) Net ITC Accessible (A) – (B) | ||||
| (D) Ineligible ITC | ||||
| (1) As per section 17(5) | ||||
| (2) Others |
The GST rate for any mobile phone is 18%, and the HSN code is 8517. Before the introduction of GST, mobile phones were subject to excise and VAT, with VAT rates varying from state to state, making it impossible to determine standard pricing. Because the tax rate is the same across the country, it was simple to decide on regular pricing for a cell phone when GST was implement. This aided in reducing the cascading tax impact.
| Type of Product | GST rate |
| Smartphone/Feature Phone | 18% |
| Parts for the manufacture of phone | 18% |
| Telephone sets (landline phones) | 18% |
| Mobile phone Battery | 18% |
| Mobile charger | 18% |
| Earphone | 18% |
| Memory Card | 18% |
| USB Cable | 18% |
| Screen Protector (Tempered Glass/Plastic) | 18% |
How do I file Form ITC-01 step by step?
GST Form ITC-01 is a declaration form submit to the GST site. GST-registered taxpayers use this form to claim the input tax credit. The input tax credit can only be claim once Form ITC-01 is filed.
Thus, the input tax credit can be claim by completing form GST ITC-01 for inputs kept in stock, finish products, semi-finished goods, or capital goods on the cut-off date, according to Section 18(1) of the CGST Act 2017.
Thus, the ITC 01 declaration form must be submit within 30 days of registration or migration to a standard scheme. Hence, ITC can be claim on invoices up to one year old for inputs. It is five years for capital items.
A Chartered or Cost Accountant certificate must be shown if the ITC claim exceeds INR 2 lakhs.
Step 1: Sign in to GST Portal
Step 2: Enter the Username and Password
Step 3: Click ITC Forms under the “Services” tab > “Returns” tab
Step 4: Under GST Form ITC-01, click the ‘Prepare online’ or ‘Prepare offline’ button.
Step 5: Select the ‘Prepare online’ or ‘Prepare offline’ control and fill in the required details.
Step 6: Select the appropriate category under the ‘Claim Made Under’ list.
Step 7: Enter supplier GSTIN
Step 8: Enter supplier Invoice Number
Step 9: Enter the Invoice Date
The taxpayer must pick the date on which the invoice was create, and the invoice date must be before approval.
Step 10: Select the type of Goods necessary for the taxpayers filing Form ITC – 01 to maintain a detailed stock register with records of procurement and consumption of inputs.
Step 11: Enter the Description of Goods Inputs
Step 12: Select Unit Quantity Code (UQC)
Step 13: Enter the Quantity
Step 14: Enter the Invoice Value as adjusted by debit note/ credit note
Step 15: Enter the Amount of Input Tax Credit claimed
Enter the Amount of Input Tax Credit claimed as the Central Tax, State/UT Tax, Integrated Tax, and Cess.
Step 16: Click Add or Save button
If multiple invoices are to be added, click the ‘Add’ button or the ‘Save’ button to submit the invoice.
Step 17: Once the invoices have been added, click Preview > Submit > Proceed.
Thus, the preview displays the form’s draught copy. No changes will be permit after submission or after you hit the Proceed button.
Step 18: Refresh the Page
Hence the status of GST ITC-01 changes to Submit as soon as the page is refresh.
The effect of GST on the price of mobile phones
The table below compares the pricing of mobile phones before GST tax to the levy under the GST system:
| Particulars | Pre- GST | Post- GST |
| Cost of manufacturing (a) | 8,000 | 8,000 |
| Excise duty @1% (b) | 80 | __ |
| Base value for VAT counting (c) | 8,080 | 8,000 |
| VAT @14%/GST @ 18% (d) | 1,131 | 1,440 |
| Sale price quoted by manufacturer to retailer (e)= (a)+(b)+(c)+(d) | 9,211 | 9,400 |
| Value addition/packing charges (f) | 500 | 500 |
| Total value (g)= (c)+(f) | 8,580 | 8,500 |
| VAT @ 14%/GST @18% on above value (h) | 70
(1,201-1,131) |
90
(1,530-1,440) |
| Total price | 8,650 | 8,590 |
How do I file Form ITC-01 step by step?
GST Form ITC-01 is a declaration form submit to the GST site. GST-registered taxpayers use this form to claim the input tax credit. The input tax credit can only be claim once Form ITC-01 is filed.
The input tax credit can be claim by completing form GST ITC-01 for inputs kept in stock, finish products, semi-finished goods, or capital goods on the cut-off date, according to Section 18(1) of the CGST Act 2017.
The ITC 01 declaration form must be submit within 30 days of registration or migration to a standard scheme. ITC can be claim on invoices up to one year old for inputs. It is five years for capital items.
A Chartered or Cost Accountant certificate must be shown if the ITC claim exceeds INR 2 lakhs.
Step 1: Sign in to GST Portal
Step 2: Enter the Username and Password
Step 3: Click ITC Forms under the “Services” tab > “Returns” tab
Step 4: Under GST Form ITC-01, click the ‘Prepare online’ or ‘Prepare offline’ button.
Step 5: Select the ‘Prepare online’ or ‘Prepare offline’ control and fill in the required details.
Step 6: Select the appropriate category under the ‘Claim Made Under’ list.
Step 7: Enter supplier GSTIN
Step 8: Enter supplier Invoice Number
Step 9: Enter the Invoice Date
The taxpayer must pick the date on which the invoice was create, and the invoice date must be before approval.
Step 10: Select the type of Goods necessary for the taxpayers filing Form ITC – 01 to maintain a detailed stock register with records of procurement and consumption of inputs.
Step 11: Enter the Description of Goods Inputs
Step 12: Select Unit Quantity Code (UQC)
Step 13: Enter the Quantity
Step 14: Enter the Invoice Value as adjusted by debit note/ credit note
Step 15: Enter the Amount of Input Tax Credit claimed
Enter the Amount of Input Tax Credit claimed as the Central Tax, State/UT Tax, Integrated Tax, and Cess.
Step 16: Click Add or Save button
If multiple invoices are to be added, click the ‘Add’ button or the ‘Save’ button to submit the invoice.
Step 17: Once the invoices have been added, click Preview > Submit > Proceed.
The preview displays the form’s draught copy. No changes will be permit after submission or after you hit the Proceed button.
Step 18: Refresh the Page
The status of GST ITC-01 changes to Submitted as soon as the page is refresh.
The effect of GST on the price of mobile phones
The table below compares the pricing of mobile phones before GST tax to the levy under the GST system:
GST Applicability on Mobile Phones
In general, mobile phones come with a charger and a USB cable (the accessories that come with mobile phones are consider a composite supply under GST) that are require to use the device. Thus the combine supply is inherently package and deliver and cannot be supply individually. As a result, the GST rate applies to mobile phones, chargers, and USB cables. The earbuds are often sold separately from the phone, which is not package and is categorize as a mixed supply.
How did the GST on mobile phones help dealers?
It’s no secret that mobile phones have become an integral part of our daily lives in this generation. Even though the GST rate has been raise to 18%, the popularity and requirement of mobile phones are growing daily.
Mobile phones were subject to excise and VAT under the VAT framework, with VAT rates varying by state. As a result, a standard price for mobile phones could not be establish. Because the tax rate is the same across the country, it was simple to determine standard pricing for a cell phone after implementing GST. As a result, GST has aided in the elimination of tax rate cascading. Finally, there has been an increase in rivalry among mobile phone sellers.
Internet dealers benefitted from the VAT regime because they purchased mobile phones from states with lower tax rates and sold them in states with higher VAT rates.
Following the advent of GST, the taxes system has become clear and straightforward.
Supply value under GST
The amount of money the seller obtains from the customer to sell products or services is the supply value.
In the case of exchange offers, clients might receive new mobile phones in return for old ones. Thus, the consumer is require to pay the difference. This difference was not taxable under the VAT regime. Thus, Barter is include in the supply value under the GST scheme. As a result, the lower sum is likewise consider and tax.
For example, under the exchange offer category, the price of a new phone is Rs.50,000. Thus, the actual cost of the new phone, excluding exchange, is Rs.55,000. The phone’s initial price of Rs.55,000 will be evaluate for GST.
Hence, Value of supply in the event of discounts – If the customer acquire the mobile phone on a discount offer, the amount could be deduct from the transaction value at the time of sale, and GST will not be collect. However, the following requirements must be satisfied.
- Discounts are record on invoices.
- According to the credit note, ITC on the buyer’s value should be reverse.
Conclusion
Even while GST affects the value of supply, it has simplified the tax structure and helped to eliminate tax cascading.