ICI urges govt to re consider tax hike on mobile sets
Lucknow, Sep 24 (UNI) Indian Cellular Association (ICA), an apex body of the mobile industry comprising manufacturers, brand owners, distributors, retailers and consumers, has urged the Uttar Pradesh government to reconsider its decision to hike the rate of value added tax (VAT) on mobile sets from existing four per cent to 12.5 per cent.
In a memorandum to the government, the ICA, said the hike will only lead to smuggling of mobiles sets from the adjoining states and even Nepal, where the rate of VAT is four to six per cent.
ICA national president Pankaj Mohindroo today also met senior state officials, apprising them of the situation.
Later, talking to mediapersons, Mr Mohindroo said the increase in the VAT will certainly lead to emergence of a mobile 'grey market' in the state, where the consumer will try to purchase the sets without giving any tax to the government.
He said with the hike in the taxes, mobiles sets in the state ranging between Rs 1,500 to Rs 30,000 would be costlier by Rs 127 to Rs 2,550 respectively.
''The grey market will lead to shutting of several retail shops in the state, while the government revenue which is likely to touch Rs 100 crore would go down to Rs 10 crore'', he claimed.
At present, there are 25,000 retailers and 5,000 distributors of mobile sets in the state, which provides employment to around 15 lakh people.
''The hike in tax will lead to retrenchement of over one million people from the jobs, who are in retail business as only 5,000 retail shops out of the total 25,000 will survive in the grey market'', he said.
This year, about 10 million mobiles sets worth over Rs 2,500 crore are expected to be sold in the state, the largest in the country.
Mr
Mohindroo
said
the
state
Government's
target
to
get
a
revenue
of
Rs
300
crore
from
the
mobile
sets
in
the
Uttar
Pradesh
would
certainly
boomrang
as
people
will
purchase
it
from
other
states
and
the
retailers
will
have
no
other
option
but
to
sell
the
sets
through
''illegal
means.'' UNI
MB
PDM
SG
RN1930