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Brief: Nokia India: After the tax rate increased from 4% to 12.5% on mobiles, sales dropped 70%

Categories: Nokia
By: , IntoMobile
Monday, July 27th, 2009 at 4:00 AM

Remember the protests I told you about in India? Well … it didn’t work. On July 1st, the VAT (value added sales tax) on mobile phones in India went from 4% to 12.5%, which is a 312.5% increase. How do you think that has impacted sales? “Industry-wide handset sales have fallen over 70% as of 23 July, compared to June. Every player has been affected and we, too, have felt the pain.” – Nokia India Head of Marketing, Vineet Taneja. He added “It is a regressive step and will give rise to a situation where the market will see (more) grey imports. And since these phones are untraceable, it is a compromise to the national security.” And “VAT collection, too, has gone down by 25%. They (government) think sales will remain constant (and) tax collections would be three times higher. This is reversing the success of the cellphone industry, the growth of which had been earlier stimulated by good policies.”

Update: This 12.5% VAT is only in the Indian state of Maharashtra, not the whole country. Some Maharashtra facts: 2nd largest state with 91 million people, capital and largest city is Mumbai.

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About The Author

Stefan Constantinescu

Stefan Constantinescu (@WhatTheBit on Twitter) has loved technology since as far back as he can remember. It started with computers, but in the past few years his passion has turned to mobile devices. As a mobile phone enthusiast who lives and breathes devices that connect to the internet, he knows he is not alone with this radical fascination of all things wireless. He is strongly opinionated and enjoys a good debate so leave comments in his posts and he’ll get back to you! Stefan began blogging as a hobby in the fall of 2006 and joined IntoMobile in the summer of 2007. Later he got a job at Nokia in March 2008, but as of June 2009 he has rejoined the IntoMobile team. He is currently based out of Helsinki, Finland.

  • Karthik

    Stefan, This is not across India, only in one state of India.

  • Stefan Constantinescu

    thank you for pointing that out!

  • Tom Purves

    I don’t understand, an 8.5% increase in the price of a phone drove sales down 70%? that doesn’t make sense.

  • Stefan Constantinescu

    you’re in a rich country where a dollar, euro or british pound hardly mean a thing to you. for people who make in a year what you do in a day, a tax increase is a lot.

  • William

    I think it’s not only because of taxes.

  • Anita

    Any idea with other state of India what is the tax % on mobiles?