Mobile telephone manufacturers have asked the government to include cellular handsets in the IT products category, thus allowing them to avail of a 4 per cent value added tax.
Pankaj Mohindroo, president of Indian Cellular Association, said the government has included telephones in the IT products category but left out mobile handsets.
"In order to remove the perception among consumers that cellular handsets will become costlier due to higher VAT on mobile handsets, the government should clarify that cellular phones of all kinds, teleprinters, wireless equipment and components, accessories have been covered under the VAT system."
Arguing that a mobile handset is not sold as a composite unit (inclusive of a charger, battery and headphones), the ICA urged a re-look into this serious anomaly.
It said sales tax as well as all other Central levies should be made uniform on all products sold as a unit.
"The high-powered committee on VAT must look into this anomaly to avoid a cascading effect on consumers," Mohindroo said.
The association also demanded a reduction in the Customs duty on handsets from 10 per cent to 5 per cent, which will take the composite duty, including VAT, to 9 per cent.
It also wants the removal of the special additional duty of 4 per cent. If the proposals are accepted, it could result in a 15 per cent reduction in the cost of a mobile handset.
Mohindroo said the move will increase the contribution to the exchequer substantially, by way of passing on of duty which the government will not get due to grey market operations.
