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