The GST rates on mobile phones and allied parts will be hiked to 18 per cent from existing 12 percent with effect from April 1, Finance Minister Nirmala Sitharaman said on Saturday.

The decision came after a meeting of GST Council chaired by the finance minister. In the meeting, the decision to slash down the GST on maintenance, Repair and Overhaul (MRO) services of aircraft from 18 per cent to 5 per cent, with full input tax credit was also taken.

GST rate on hand-made and machine-made matchsticks was brought to 12 per cent, which earlier was 5 per cent for hand-made and 12 per cent for machine-made.

The council decided to extend the due date for the filing of annual return for financial year 2018-19 to June 30. It was also decided to levy late fees for taxpayers with turnover less than Rs 2 crore.

In order to make the GST Network more efficient and increase its capacity, the Council also asked Infosys to deploy more skilled manpower and make the system glitch-free by July 2020.

Responding to the council’s decision on rate hike on mobile phones, the India Cellular and Electronics Association (ICEA) said the decision would affect the consumption of product.

The 6 per cent GST increase will be detrimental to the vision of ‘digital India’,” said Pankaj Mohindroo, ICEA Chairman.

“Consumption will be stymied and our domestic consumption target of $80 billion (Rs 6 lakh crore) by 2025 will not be achieved. We will fall short by at least Rs 2 lakh crore,” he said.

Earlier on March 12, the ICEA had in a letter told the finance minister that the mobile handsets sector was in deep stress due to the supply chain disruption due to the deadly coronavirus.

ICEA termed the timing of the decision as ‘inappropriate’.

It said the GST hike might adversely affect the localization of manufacturing as well as popularization of the country’s digital payments objectives.

As per ICEA, around 32 crore Indians who buy the product in the country will be impacted by the government’s move.