GST and mobile phone bills: Impact on post-paid and pre-paid users

From July 1, all the mobile phone users will have to shell out more for their mobile phone usage. The Goods and Services Tax ( GST) Council has put telecom services under the 18 per cent slab. Currently, telecom services are taxed at 15 per cent.

The 3 per cent increase will reflect in the bills of the current postpaid users. For the prepaid users, there will be deduction in the talk time.

Postpaid users
Under the current tax regime, if your current postpaid usage is Rs 500, your total bill amount will be Rs 575.

Under the new GST regime, if your current postpaid bill is Rs 500, you will have to shell out Rs 590. It is Rs 15 more than what you are currently paying.

However, there are reports that telecom companies might absorb the 3% increase in tax rate on their full talk-time prepaid products as well as on select data sachet prepaid vouchers amid heightened competition following Reliance Jio’s entry.

Prepaid users
Effective talk time for prepaid customers will go down. If you recharge your phone with Rs 100 prepaid voucher, you get talktime worth Rs 85.
Post GST, if you recharge your phone with Rs 100, your talktime will marginally dip to Rs 82. A total deduction of Rs 3.

Already troubled by the disruption inflicted by the newbie Reliance Jio, the telecom industry expected some relief from the GST Council in the form of lower tax slab for telecom services. The industry lobbyists had argued that telecommunications being an essential service should attract lower tax rate. But the council decided to raise the tax rate.