Value added tax likely to cut on cellphones in Telangana

The ambiguity regarding VAT on sale of cellphones in Telangana state is likely to end soon with the Telangana state government mulling to roll back the tax from 14.5 per cent to 5 per cent as is the case in neighbouring Andhra Pradesh, Tamil Nadu and Karnataka.

VAT on cellphone was made 5 per cent a month before TS and AP became separate states in June 2014. While AP continued with the same, the TS Commercial Taxes department reversed it to 14.5 per



cent again.

However, this led to widespread confusion with a few shops charging 5 per cent like before while priority dealers charged 14.5 per cent. Also, it led to grey market operations where phones were sold without bills and at discounted prices.

Commercial Tax officials stated that they had noticed a few cases of sellers smuggling phones from Vijayawada and selling them at a higher price in Khammam and Nalgonda districts.