At a time when all major handset manufacturers are struggling to cope with disruptions caused by the coronavirus (COVID-19), the Goods and Services Tax (GST) Council has worsened the matters for mobile phone sector. Notwithstanding falling demand and severe crunch in supply of key mobile components, the council in its 39th meeting announced the raise in rate of taxation for mobile phones and specific parts presently attracting 12% to 18%. Reacting to the move, the representative of the Smartphone industry said the industry had heeded Prime Minister Narendra Modi’s call to participate in the “Make in India” initiative. But today’s recommendation by the GST Council to raise GST rate on mobile phones from 12 per cent to 18 per cent will seriously harm the industry. Further he added that the industry is already struggling with profitability because of the depreciating rupee and Indian Smartphone industry is facing supply chain disruption because of the current COVID-19 situation. As a result of this GST increase, all Smartphone makers will be forced to increase prices. This can weaken demand and mobile industry’s Make in India program. This could also have long lasting impact on internet penetration and digital India program as majority of Indians access internet on smartphones. They have requested the prime minister and finance minister to reconsider the increase. At least for people who cannot afford to buy expensive phones, we suggest that GST on all phones under Rs 15,000 should be brought back to 12 per cent (similar to differential GST structure for TV's smaller than 32"). Analysts said the rate hike could compound manufacturers’ problems as factory shutdowns and production cuts in China have led to a surge in the prices of several components. The increase in customs duty on imported components announced in the Union Budget has also put severe pressure on their margins. Although the government could earn an additional Rs 12,000 crore in revenues in the form of GST collections, the move will be detrimental to the health of the telecommunication market that has so far performed better than other consumer facing sectors in India as the additional revenue estimates could be matched only if the market remains at 160 million units this year, as purchases are already in decline. As most leading players are already operating under wafer thin margins, they have no option but to pass on the additional burden.