Mobile handsets and parts are set to get costlier with the GST Council increasing the rate by 6 per cent to 18 per cent. The move would further slump demand at a time economic growth has slacked, analysts said.

The 39th meeting of the GST Council on Saturday also decided to slash the GST on maintenance repair overhaul (MRO) services for aircraft to 5 per cent from 12 per cent and to change the place of supply for B2B MRO services to the location of the recipient.

It was also decided to rationalise the tax rate on handmade and machine-made matchsticks to 12 per cent from 5 per cent and 18 per cent, respectively.

All decisions will come into effect from April 1.

“The decision was taken to end the inverted duty structure. The mobile phone manufactures will have to decide if they want to raise the prices,” a senior finance ministry official said.

The government has said it will look into the legality of the GST Council borrowing from the market to meet the compensation requirements for states. This year Rs 80,000 crore has been collected as compensation cess, but states have been given Rs 1.20 lakh crore.

Meanwhile, Infosys chairman Nandan Nilekani made a detailed presentation for the transition into a better GST Network system and the requirement of hardware to enhance the capacity for addressing system-related issues being faced by taxpayers.