Enormously spike in the Goods and Services Tax
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| Image: Bussiness Today |
Due to an abrupt increase in the Goods and Services Tax(GST) many Chinese smartphone brands face the effect in the selling price of them as the majority of the phone maker gave some update on their social media related to the increase in the GST percentage and they clearly mentioned that they will increase the selling price of the smartphones. Companies that work on very small profit margins of approximately less than 8%, especially, Xiaomi and Realme they'll face a huge impact in this hike of GST rate because of most parts of these companies smartphones directly import from the outer region of India and Price is also one of the most important aspects of these companies.
IMP: GST rate on Mobile phones has increased by 50% from 12% to 18%.
On 31st March, CEO of the Xiaomi India post a photo related to this hike in the GST and justifying itself for the increment in the rates of the smartphones from 1st of April, 2020.
— Manu Kumar Jain (@manukumarjain) March 31, 2020Mi fans, #GST on mobile phones has increased by 50% from 12% to 18%.
After much deliberation & in keeping with #Xiaomi policy of maintaining <5% margin on our hardware products,we will be increasing prices of our products.
New prices will be effective immediately. Thank you! 🙏 pic.twitter.com/mdTqKdXm3r
Similarly, Realme also publish a letter mentioned all the reasons for price hiking and it is the second time when a company changes the price of their smartphones after 2018.
This letter is can be found on the company's official website.
The real reason behind this scenario is the outbreak of COVID 19 in the world as this disease is a pandemic that means the whole world is affected due to this threat. As these giants are facing huge issues in Supply chain management, Rupee depreciation is the primary reasons for the price hike.
Stay safe and Stay at Home.