As part of its initiatives to move towards a digital economy, the Telangana government has decided to reduce VAT on mobile phones from 14.5 per cent to 5 per cent. The Telangana Legislative Assembly today passed a Bill reducing VAT on mobile phones.

Animal Husbandry Minister T Srinivas Yadav, who moved the Telangana Value Added Tax (Fourth Amendment) Bill, said the Bill seeks to reduce VAT from 14.5 per cent to five per cent. According to the statement of objects and reasons of the bill, trade diversion has been taking place from Telangana to neighbouring states due to higher rate in the state.

“On account of this amendment, state revenue to the extent of Rs 5 crores will be protected,” the Financial Memorandum of the Act said. Pointing out that reducing VAT would benefit common people, opposition Congress and BJP also supported the Bill. However, Congress members similar reducaiton in taxes on iPads also.