Option 1: Reuse
Reuse is always better than recycling because recycling requires energy and not all parts of a phone may be recyclable.
However, there is only so long a mobile phone can be used (mine is now 5 years old and is starting to malfunction), so there comes a point you want to get rid of it. Mobile phones often contain rare earth metals like neodymium, europium, terbium, and yttrium, but also copper, gold, palladium, and platinum. So if reuse is not an option anymore make sure it is recycled properly.
Option 2: Donate to charity
My personal preference is to donate my old phone to a charity organization. Where I live (The Netherlands) there are all kinds of charity organizations that collect old smartphones (and ink cartridges and mp3-players). The charities sell the phones to local e-waste recyclers for somewhere between €1 and €3 per phone. Some charities even provide free envelopes so you can post the phones to them.
Option 3 : Return it to your phone manufacturer
Most large phone manufacturers have take-back/recycling programmes, often world-wide. I noticed on your profile that you live in India and with a quick Google search I found that at least Samsung and Motorola have such a program in India.
Option 4: Find an e-waste recycling company in your area
If your phone manufacturer doesn't have a take-back program, I'd advice you to search for an e-waste recycling company yourself. Cell phones are being recycled in more and more countries, because it is rather profitable.