GST Council Cuts on Electronics: Are Smartphones Still Expensive?
Relief has come for consumers and the business community in India. In a significant meeting of the 56th GST Council held on September 3, 2025, the central government announced major changes aimed at benefiting the general public and the middle class. By significantly reducing taxes on electronic products, consumers have been given relief from the burden of inflation. However, smartphone users may not rejoice just yet, as the GST (Goods and Services Tax) rate on smartphones remains unchanged.
Major Tax Cuts on Electronics
The GST rate on televisions larger than 30 inches, air conditioners, dishwashers, computer monitors, projectors, refrigerators, and lithium-ion batteries has been reduced from 28% to 18%. As a result of these decisions, consumers are expected to save significantly when purchasing these products during the Diwali and festive season. Experts estimate that air conditioner prices could drop by ₹1,500 to ₹2,500 depending on the model. Similarly, prices of large TVs, washing machines, and other electronic products may see relief of up to 10%.
GST Rate on Smartphones Remains Unchanged
The GST rate on smartphones will remain at 18% for the time being. This decision has disappointed both consumers and the industry, which had been advocating for a lower tax slab, considering smartphones as an everyday necessity rather than a luxury item. The industry had argued that smartphones have become essential products, but the Council has not provided any relief so far.
Simplified Tax Slabs: Only 5% and 18% Main Rates
The meeting also aimed to simplify the tax system in favor of consumers. Previously, multiple slabs such as 12% and 28% existed. These have now been removed, leaving only two main slabs — 5% (merit rate) and 18% (standard rate). Certain special “sin goods” (such as tobacco and luxury cars) will carry a higher 40% rate to help the government meet revenue targets. Essential daily-use items such as life and health insurance, paneer, and Indian bread have been placed under the 0% tax bracket.
When Will the New Tax Rates Take Effect?
The new GST slabs and rates will come into effect from September 22, 2025, allowing consumers to benefit directly at the start of the festive season. The changes will be implemented in phases, with some products seeing the revised rates in the first phase and others in subsequent phases.
Key Tax Cuts: Which Products Will Become Cheaper?
The GST rate for the following products has been reduced from 28% to 18%:
- Air conditioners
- TVs larger than 32 inches (32-inch or smaller TVs were already in the 18% slab)
- Refrigerators
- Dishwashers
- Computer monitors and projectors
- Lithium-ion batteries (HSN 8507 category)
Direct Benefit to Consumers
These tax cuts will make branded electronics more affordable for consumers. With the reduction from 28% to 18%, prices could drop by around 10%, making it easier and more cost-effective for middle-class households to purchase ACs, TVs, and other electronics.
Why Smartphone Users May Be Disappointed
The GST Council has retained smartphones in the 18% slab because the lower slab of 5% generally applies to everyday essential items. Smartphone manufacturers had hoped for a tax cut, but government sources have indicated that no such plan is currently in place.
Major Relief for Insurance and Health Sectors
The 56th meeting also extended relief to the insurance and health sectors. All types of personal life insurance and health insurance (including family floater and senior citizen policies) will now attract zero GST, which will expand insurance coverage and reduce the financial burden on middle-class families.
Improved Business Environment for Traders
The Council has taken steps to simplify GST compliance. Measures such as single-window filing, automated tax returns, and the early establishment of appellate tribunals are expected to provide faster dispute resolution and greater transparency, making it easier to conduct business.
Why This Decision Is Significant
This meeting, held under the direction of Prime Minister Narendra Modi, is considered historic as it provides relief to the common citizen while also boosting ease of doing business and overall economic growth. Decisions taken in the presence of state chief ministers, finance ministers, and senior officials reflect national consensus and cooperation.
Conclusion
The new and simplified tax structure will ease the burden of inflation on consumers while boosting demand for domestic and electronic products. Smartphone users will need to wait, but this package represents significant relief for the broader electronics market and the insurance sector.
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