Have Things Become Cheaper Due To GST? What Is The Impact Of GST?
Has GST made things cheaper for you? Or expensive?
GST came to implementation on July 2017 in India. With online gst return filing and compliance schemes for small businesses, GST has simplified the tax structure of India.
Moreover, it turns out that GST has also elevated and dropped the prices of a wide range of products. Let us see in details which are these products and how they affect you.
What Are The Tax Rates Of GST?
- 0% Tax: Daily essentials like milk, cereals, meat, curd, sanitary napkins, etc. and services like religious travels, Haj yatra, metro travel are exempt from GST.
- 5% Tax: This tax applies to goods like edible oil, sugar, spices, tea, coffee; services include rental cab, air travel, etc.
- 12% Tax: Products like vegetables, fruits, nuts, computers, diagnostic kits, reagents and services like movie tickets are included in this slab.
- 18% Tax: This tax rate will be levied on hair oil, toothpaste and soaps, capital goods, power banks, sports goods, electronics, etc. It also includes services like outdoor catering and theatre.
- 28% Tax: Luxury items such as cars, appliances like AC and refrigerators, premium cars, cigarettes and aerated drinks, high-end motorcycles are included in this tax slab.
Additional cess and surcharge are also implied in goods and services. The rate of cess is 0.5%, whereas the rate of surcharge is 10% on the sales tax and purchase tax.
What Is The Impact Of GST?
The tax slabs applicable to the respective goods and services will increase or decrease the prices for you as a consumer.
- In case the GST on the product is the same as the previous rate of tax, you will see no change in prices.
- In case the GST on the product is increased or decreased compared to the pre-GST era, you will notice the respective change in the prices of the goods.
The expected impact of GST on your finances is like a mixed bag. The goods essential for life are exempted in GST; hence it will not result in any significant price change. But many other essentials are placed in 5% and 18% tax slab, which is a severe cost on the pocket.
The government is increasing the indirect tax collection of the country through this increased tax on goods and service. Businesses that exceed the turnover threshold must register online for a gstin and pay their taxes on time. This will decrease the deficit of the Indian economy for the growth of all.
Which Things Will Be Cheaper?
- Essential food items will be taxed at 0%.
- Edible oil, tea, coffee, spices, processed food items, economy class airfares, solar panels, etc., previously taxed at 9%, will drop to 5%.
- The tax for sports goods and bicycles will decrease from 18.5% tax to 12%.
- Hotels, soaps, shampoos, hair oil, toothpaste, shaving creams, etc. which were charged at 21% will now drop to 18%. This tax drop also applies to services like restaurants, air travel, railways tickets, and DTH.
- Paints and cement will become cheaper under GST.
- There will be an average of 24% to 18% tax cut for movie tickets.
Which Things Will Be Expensive?
Luxury goods are taxed higher from 21% to 28% with an additional cess of 15% on luxury cars, tobacco, aerated drinks, etc. Non-essential luxury goods will receive higher tax increasing the tax rate:
- High-end hotels will be charged 28% GST.
- The rate has hiked from 15% to 18% for financial services like banking transactions, insurance, stock market and mutual funds. Also, the renewal of premium for life insurance policies has become expensive.
- Catering services have become expensive, taxed at 18% compared to the earlier service tax of 10.5%.
- Business-class airplane tickets will be taxed at the rate at 18%.
- Jewellery and high-end accessories will increase to a 3% tax rate.
- Electric appliances like air conditioners, television, refrigerators, vacuum cleaner, dishwasher, washing machines, etc.
- Beauty and personal care items such as perfume, makeup, skincare, etc.
- Services like mobile and wi-fi, healthcare, education
- Tobacco, cigarettes, and pan masala
GST will not bring an extreme change in prices of goods and services. It will bring down the costs of essential products and services for the affordability of the ordinary man. At the same time, it will hike the prices of non-essential luxurious commodities to increase the tax collection of the government.
In both ways, it will ultimately be beneficial for consumers in the long run.