Reduce VAT on cell phones: Lobby asks Bengal

KOLKATA - Handsets manufacturers body Indian Cellular Association (ICA) Friday asked the West Bengal government to adopt a uniform 5 percent value added tax (VAT) on mobile phones.

It said Finance Minister Asim Dasgupta’s proposal in Budget 2010-11 to increase VAT on mobile phones costing more than Rs.3,000 from 4 percent to 12.5 percent would adversely impact their sales in the state.

“We strongly urge the government to adopt a uniform 5 percent VAT on all mobile phones instead of the proposed differential rate. At a uniform 5 percent rate, we expect legitimate sales to be impacted only marginally and the overall mobile handset industry would continue unhindered to touch the projected size of Rs.2,300 crore by 2010-11,” ICA President Pankaj Mohindroo said at a press meet here.

He said revenue collection in the state would decrease due to the split VAT structure.

Also, a higher VAT would lead to an influx of mobile sets from neighbouring states with lower VAT rates.

Assam has a VAT rate on mobile handsets at 5 percent while Bihar, Orissa, Jharkhand have at 4 percent.

Around 8.5 million handsets have been sold in West Bengal this fiscal (2009-10), of which 5.9 million are in the sub-Rs.3,000 category.