This Is How GST Will Affect Your Pockets!
The new GST law happens to be one of India’s biggest tax reforms, an initiative that is expected to improve the compliance levels, thus increasing the government revenue and creating a common base for the businesses by amalgamating the central and local taxes into a single levy.
The GST law seems to be a mixed basket with some of the necessities becoming cheaper, while the others might just get more expensive. But it is anticipated that in the longer run, GST might be conducive for most of the sectors of the economy. India might observe an inflationary impact at the onset of the reform but will eventually fade away once the legislation sinks in completely.
The table below represents the present rates and GST rates to be levied on the mentioned products;
*No tax i.e. 0% tax on almost 50% of the items in the Consumer Price Index basket, including food grains, milk, vegetables, and essential medicines.
| SLABS | GST RATES | PRESENT RATES | PRODUCTS |
| 1. | 5% | Upto 9% |
|
| 2. | 12% | 9%-15% |
|
| 3. | 18% | 15%-21% |
|
| 4. | 28% | 21% |
|
GST would eventually change the current tax regime of production-based taxation to a consumption-based system. There is no second thought on the fact that the businesses would definitely benefit once the GST has been rolled out rolled out and one of the aspect of the new tax regime will be the requirement for timely and accurate GST Return Filing. however, the overall benefits expected for the common man are still speculative. The end consumer should also reap the benefits of the new tax regime, once the business houses have transitioned completely to the new tax structure and start to pass on the benefits to the average Indian citizens.
If you have been wondering about how GST will affect your everyday life, here is a quick review of how this tax legislation will impact the prices of goods and services;
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PRODUCTS THAT MAY BECOME ECONOMICAL: |
PRODUCTS THAT MAY BECOME EXPENSIVE: |
REASON: For consumer goods manufactured, the current tax regime states the consumer to pay approximately 25%-26% more than the cost of production due to VAT and excise duty, with the GST rate expected to be 18% for most goods, they are likely to become cheaper. |
REASON: The effective service tax rate at present is 15% & it applies to almost all services (except the essential ones such as ambulance services, cultural activities, sports events, and certain pilgrimages), this rate will increase to 18% under the GST regime making it more expensive. |