Indian Mobile Phone Retailers Protest at Higher Sales Taxes

A protest by mobile phone retailers over a rise in handset sales tax resulted in the closure of around 5,000 shops in the Indian state of  Maharashtra yesterday. The state government recent raised the sales tax from the national average of 4% to 12.5%.

A delegation from the Maharashtra Mobile Trade Association presented a petition to the Maharashtra VAT Commissioners' office calling for the tax rise to be scrapped.

Maharashtra Mobile Trade Association president Tushar Avalani said that "Maharashtra's mobile traders have been one of the most successful and significant channels for the proliferation of mobility in the state. As the largest mobile handset market in India, the state's contribution to the industry, government and consumers is undisputed.

A regressive step like this will severely cripple the growth of organised mobile retail trade in the state, in addition to leading to a resurgence of grey channel," Mr Avalani said. "We expect sales through the legal channels to fall drastically from the current 1 million units a month," he added.

Vipul Sabharwal, Director Sales, Nokia India recently warned that while the tax rise may sound like it would bring in higher revenues for the government, if it resulted in lower sales then the government could end up worse off.

It has been claimed that sales of mobile phones at authorised retailers in Mumbai have dropped by 60 per cent since the tax was raised.

Posted to the site on 10th July 2009