WHY WERE MOBILE COMPANIES WORRIED ABOUT GST COMPLIANCES POST ITS IMPLEMENTATION?

INTRODUCTION

The growth of second door audiences: The significant way that television and media companies can ignore at their own peril. These people act with social networks and television shows in real-time through the usage of the mobile device. Users send, tweet, and gossip on their smartphones and tablets while seeing their favourite displays full-screen. As the number of mobile device users is growing exponentially, we will just consider the way to expand further. Another action of mobile device user is on this increase: 'Catch-Up Commuters' who utilize their mobile devices to see television shows that they were unable to get on television.

GST has been a boon for the telecom industry. The government has also introduced a new tax on mobile phone subscribers. As per the data released by govt in April 2017, there is now more than 50 per cent of all mobile subscribers in India. That's an increase of over 20 per cent from the 2016 year. It is expected that the growth rate of mobile subscribers will be around 15 per cent by 2022. However, the growth rate of mobile subscribers is still low and the revenue growth remains stagnant.

WHY WERE MOBILE COMPANIES WORRIED

However, GST rates on Mobiles and accessories were just 12% and 18% before as we look at the past years or a few months back. And it was definitely a good miracle for the people seeking technology.

As technology arrives in the market, people are always keen towards purchasing it which indirectly benefits the company and the mobile retail sellers. As these companies are dependent on each other as if, the telecom company is dependent on the sell of the mobile so that their plans and new sims could be sold and the mobile company is dependent on telecom companies so that people prefer to purchase their product with all interest by using telecom services and can connect to the internet and do the end task.

This is a very important factor which affects the business strategy of the mobile industry. There are many reasons for the concern of GST but one major reason is that the government has not taken any steps in the right direction. It is because of the lack of transparency in tax laws and the absence of proper guidance from tax authorities.

After the implementation of GST, the end customer was quietly satisfied with the cost they have to pay on the electronic appliances. It was not a big issue but as now we see at the current market GST on Mobile has increased to 18-20% which is really not done situation for the customer and also for the mobile companies.

As looking at the past month's people are more interested in buying mobile phones and accessories and electronic items. But now the mobile users are not interested in buying new devices which directly results in the heavy loss of the mobile industry. If we look at a scenario a phone before was sold at a cost of rs.16000, and after the implementation of new GST rules, the price of the same phone has stuck on rs. 18000. A price gap of rs.2000 can be normal for most of the people but not for the majority of the people.

GST resulted within the production of phones and phone accessories costlier as they perform under cheaper tax rates thanks to privileges given supporting the government's 'Make in India' policy. On the opposite side, this has also resulted in additional job opportunities.

Companies like Xiaomi, Samsung, Realme, Motorola who seems to have a tough competition in midrange (Rs. 10000-30000) market, but after this new tax implementation their phone price has hiked more and now a normal mobile phone cost is rs.20000 without a change in the retail price, which was rs.16000 before.

This price not only has raised the market but also lowered the mobile companies profit to make good products as they also have to do the price cut to provide customers with their best products to be in competition as well as in the market. Flagship phones and their market has not got affected much as if a person is ready to but a phone worth Rs. 70000 will not hesitate to give rs.5000 or 7000 more to it.

The difficulty lies in the midrange market for which as for the present situation is concerned companies has to deal with less profit and some with loss.

The government is additionally seeking to use the customs over the imported mobile phones so as to spice up and encourage the local manufacturers to compete within the market. the appliance of customs is being targeted at the foreign companies exporting towards India, valuing down the local manufacturers and to also evoke Apple to start out producing in India.

GST strategies to bring the best solution for the consumers as well as for retailers and companies, But currently, that's not the situation for what GST was designed. As the mobile devices seem to be rising with time their price bracket may become a barrier for the mobile companies for the downfall. Many mobile companies are now disturbed with the new GST implementation, and even the GST has been criticized by some people who have argued that it will lead to a huge loss for the company. This is because of its high-cost structure and lack of transparency which makes the whole process of GST more complicated than before.