GST on Electronics

The concept of GST is considered as surgical strike on the indirect taxation method in India as it was implemented on July 1, 2017. The GST was introduced with the objective of simplifying and rationalising the earlier tax system, removing the joint effect of multiple taxes and establishing a common outlet for sales across the country. In this article, this assumption is true as one of the most affected sectors was the electronics industry due to the tax reform.

GST Rates on Electronics

As per the GST Act and the rules all electronic goods and appliances come under different tax categories as per their nature and category classification. Various electronics come under different categories of the GST where it varies from 5% to 28% for most of the electronics falls in the slabs of 18% and 28%.

1. 5% GST Rate:

This specific tax slab involves commodity like LED or LCD panel or any components which goes into the making of LED or LCD panel.

2. 12% GST Rate:

Computer monitors, projectors in manufacturing electronic goods or parts of the manufacturing of mobile phones fall under 12% GST slab.

3. 18% GST Rate:

This tax slab covers electronics items such as television, no more than 32 inches, digjital cameras, video game consoles and certain parts and electronic components used in manufacturing of electronics items.

4. 28% GST Rate:

This is the peak GST slab that people have to pay for electrical appliances, and electronics including LED televisions of screen size 32 inches and above, air-conditioners up to 10 KW, refrigerators up to 2 star rating, washing machines, and several other products that fall under electronic items.

It’s important to note that the GST rates mentioned above are not flat rates but are divided into two components: Central Goods & Service Tax (CGST) and State Goods & Service Tax (SGST) for intra-state sales or Integrated Goods & Service Tax (IGST) for cross-state sales.

Consequences On Pricing Factor and Consumption

The effects of GST in the implementation of Electronics in the Indian market obviously has influenced the pricing of such products immensely.

New tax policy of GST has been able to bring down the tax incidences ratio on electronics in some way consequently bringing down the prices of some of the products. Nevertheless, in the case of other electronic items, slight increase in prices have emerged owing to GST rates depending on the previous tax incidence.

They have had a sophisticated effect on the purchaser interest in electronics products. Even though lower prices because of implementation of GST has some cheerful impact on most of the products, the general overall market, purchasing capacity, and mentalities in the society are other determining issues which affects the demand of electronic products.

In the context of the conceptual model, ITC and SCCM are the two dependent variables, both of which will be measured by surveying a sample of firms.

Some of the advantages of the GST regime for the electronics industry include Input Tax Credit ITC will be available in the latest GST regime. Taxcredit or ITC essentially refers to the amount of credit that manufacturers and retailers of say electronic goods can obtain on the taxes paid on inputs like raw material, components and services used in course of their business under the GST framework. In this way, there is a minimization of the taxes as well as improving the competitive capacity of the electronics business.

Further, the GST has integrated the supply chain and modeling of perishable goods so that they can easily pass through different states without imposing adequate tax paperwork. It has increased supply chain effectiveness, as well as decreasing the cost of logistics in the electronics industry as a way of benefiting producers as well as users.

Challenges and Concerns

They are drawback as follows: Although the implementation of GST has benefited the electronics industry in many ways, it has also experienced several challenges and concerns. Some of the risks highlighted includes the following The first major risk is the extra burden of compliance measures and the continued expansion of the GST structure that the electronics SMEs stand to face.

The first issue is in determining the GST slabs under which different e-products should be grouped. In some cases, depending on the electronic goods imported some may cause controversy as to which class they belong to thereby giving rise to taxation.

Future Outlook and Expectations

With all indicators showing that the GST regime is well on its way to solidifying, it is anticipated that there will be more rationalization and efficiency enhancements in the future to come. Businesses as well as the federal government are already placing efforts in responding to the issues being raised by the various sectors, such as the electronics industry, in achieving a more effective and efficient implementation of the GST framework.

Also, furthering the government’s efforts towards Make in India in electronics production via incentivised policies such as the PLI scheme, India’s electronics industry is expected to grow. Major strategies like the GST framework, when harmonized with such measures, can help laid the fundamentals of the electronics industry with a view to fostering its development in the nation.

Conclusion

Over time, GST implementation on electronics applicable to all varieties of electronics has led to shifts in the taxation scheme of the industry. Though the GST rates have brought about some sort of tax neoclassical and positive impacts such as Input Tax Credit, efficiency in supply chain, etc. , the industry has experienced some negative impacts such as compliance burdens, product classification, etc. , and tax evasion.

Since the Implementation of GST regime is in its nascent stage and the government is actively in the process of tackling the issues raised by all the stakeholders, electronics and Hardware industry in India is set to grow more and becomes more competitive. If a proper GST structure is incorporated along with the measures set by the state and federal government towards the development, enhancement and stability in the electronics industry it will benefit the manufacturers as well as the consumers.