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Mobiles to cost more in Maharashtra

June 30, 2009 19:38 IST

The prices of mobile handsets are likely to increase in Maharastra from Wednesday as the state government has hiked the sales tax on devices to 12.5 per cent from four per cent now.

The hike in value added tax (VAT), on mobile phones to 12.5 per cent will come into effect from Wednesday.

According to analysts, the tax increase would push up the cost of a Rs 3,000 mobile handset by Rs 250.

The increase in tax would lead to a flourishing grey market and the government would suffer substantial revenue losses, Nokia India managing director D Shivakumar said, adding that with the increase in tax, the mobile phones would become costlier in the state.

The handset maker, along with apex industry body the Indian Cellular Association (ICA), will meet the Maharashtra government this week to oppose the state's move to raise sales tax on mobile phones.

ICA national president Pankaj Mohindroo said, "The move is a lose-lose proposition for the government, industry, trade and consumer."

Earlier, some states, especially West Bengal, had proposed to hike the tax on mobile handsets but the move was suspended after the association intervened.