India seems all geared up to witness the dawn of new taxation regime from first day of July and one sixth of humanity is anticipating a brighter tomorrow with the introduction of Goods and services Tax (called GST hereafter). GST may well turn out to be shape shifter for the Indian Economy by deciding the destiny of businesses tax rates in India.Thus, an average Indian is also skeptic of its effect on his platter. While the ruling establishment is pulling no punches in setting claims on a “reform” conceptualized during the opposition’s regime.
Government claims, the new tax rates applied on daily-use household items could bring down Indian mediocre class monthly bill once the GST is in force. It will give relief to the taxpayers and will boost the Indian economy and citizens remain unaware of its cyclo-rama. Hence lets attempt a series of panoramas to gather its functional understanding.
As per Finance Ministry groundnut oil, palm oil, sunflower oil, coconut oil, mustard oil, sugar, palmyra jaggery, sugar confectionery, pasta, spaghetti, macaroni, noodles, fruit and vegetable items, several food products, pickle, murabba and the essential foods such as milk powder, curd, butter milk, unbranded natural honey, dairy spreads, cheese, spices, tea, wheat, rice, flour, and spices are placed in the lower tax bracket.
Products or Services to get expensive after GST :
Mobile Phone Bills
Earlier we were paying 15% service tax on recharge amount and on phone bills but from now on wards tax rate is fixed at 18 %. Like on a bill of Rs 500 consumer pays 15 % as service tax and pays Rs 575 as total amount to his service provider. After GST, you will have to bear the brunt of Rs 590. Internet packs and call rates may also become higher.
Dining out will be expensive. Currently if you are paying about 18.5% as service tax and VAT. But after GST, it is expected that the rates can vary from 18 to 20%.
Banking & Insurance
Services you get from banks are taxed at 14.5% currently which become costly by the rate of 17- 18% after GST
Service tax on airline fares ranges between 6%-9%. GST will push the taxes up further to 15%-17%
Ayurvedic products become costlier as the government has kept these products in the 12 % bracket. Ayurveda products currently attract with 8-9%.
Gold is geared up to become SKYHIGH. Currently, only 2% tax is paid by the buyers, but after GST at least 6 % is expected to be paid by buyers. Which is becomes bad news for women.
GST will not be exceptionally beneficial to train passengers as the effective service rate of rail tickets which was 4.5% will now increase to 5% in GST.
Don’t expect discounts offer after GST. Online shopping and online ticket booking services become expensive.
Product or Services to become cheaper after GST:
Processed Foods and packed food
Companies manufacturing processed food pay various taxes summing up to 24%-25%. With GST, it’ll sum up to 17%-19%.
Entertainment Taxes will provide some relief by 2-4%.
Televisions and washing machine
Television tax will be around 18-20% rather than 24.5%. So LED TV of Rs 20,000 was of Rs 24,900 approximately now it will be around Rs 23,600.
Tax for cement is 25%. With GST it will become 18%-20%.
Buying a car
The dream of luxury car will now seems reachable for the common man. GST fixed the tax of 18% on car.
Such as, if buyer want to buy a car of Rs.5 lakh car, with excise duty of 12.5 % and with VAT roughly totals to Rs 6.25 lakh. Under the GST, it is expected now to get lower up till Rs 35,000. If the rate is fixed at 18%, the price will now be Rs 5.9 lakhs.
Air travel for economy class will become cheaper with tax rate fixed at 5 % against the existing 6 %.
Ola and uber cabs
Cab rides could get marginally cheaper for customers. The incidence of tax will come down to 5% from 6% for bookings made on cabs.
|ITEMS||Units Consumed||MRP||Monthly budget before GST||MRP After GST||Monthly Budget after GST|
|Vegetables and Fruits||30||50/kg||1500||50||1500|