GST Simplified: what will be costlier and what will be cheaper?

  • GST Simplified: what will be costlier and what will be cheaper?
30-06-2017 | Pratidin Bureau. |

GST is the biggest tax reform the country has undertaken since Independence. GST is subsuming a total of five taxes and levies - excise, NCCD, infra cess, CST and VAT -- which is bringing down the final effective tax rate in almost all the cases.
 
We already know that the GST rates will be 5%, 12%, 18% and 28 %. Do you know how these rates will affect your pocket?
 
Most of the food items were also not taxable under current regime so the price change is expected to be largely neutral.
 
After roll out of GST some services will get cheaper-
 
Kitchen utensils like stainless steel cookers, pans etc. are likely to get a little cheaper as they are charged at the rate of 12% under GST, which is lesser than the current tax rate of 19.5%. 
 
Air travel via economy will fall while Budget hotel rooms below Rs. 1000 per day are exempted from GST.
 
Household items like hair oil, soaps, and shampoos are also expected to get cheaper.
 
The rent of residential buildings is exempt from GST.
 
Effective rate on capital goods and industrial intermediaries has reduced (mostly within the 12-18% range) which will result in a big boost to industries.
 
The steel industry will enjoy the benefit of lower tax rate of 5% on the major inputs such as coal and iron ore.
 
The prices of biscuits, corn flakes and ice-creams will come down as the tax rate has been cut down by 14%. The tax has been slashed by 5% on chocolates.
 
The cost of TV, fridge, washing machines, smartphones will come down as the tax has been slashed from 33% to 28%.
Restaurants with turnover up to Rs. 50 lakh and those without air-conditioned facilities will pay less tax.
 
Prices to be increase after roll out of GST:
 
Banking and insurance Life, health, and car insurance premiums will increase as they attract only 15% currently and will taxed under 18% under GST. Banking services charge 15% service tax currently which will increase to 18% under GST.
 
Most banks have applied transaction charges on cash withdrawals from different bank ATMs as well as cash withdrawals from branch (first 5 for both are free). All these attract 15% service tax currently which will increase to 18% under GST regime.
 
Services like mobile, DTH, booking of tickets through agents, apps will increase due to the increase in rates from 15% to 18%. 
 
Sanitary items like taps, faucets etc. would get costlier under GST as they are kept under the 28% tax bracket.
 
Prices of cars will increase as they will attract 28% GST along with cess. Small cars will attract 1%-3% cess. Mid-sized cars, SUVs and luxury cars will have a 15% cess. Motorcycles will attract 3% cess.
 
Travelling by app-based cabs like Ola and Uber will become more expensive as the tax is increasing to 18%.
 
In air travel, luxury and business class ticket prices will rise.
 
Gold, diamonds, and other precious stones will attract 3% GST which will increase prices in most states where the earlier rate came to 2% (1% excise +1% VAT).
 
Rooms with daily tariff between INR 1000- 2500 will attract 12% GST. Rooms with daily tariff between INR  2500-5000 will be taxed under 18%. Rooms above INR 5000 per day will be taxed at the luxury rate of 28%.
 
Cement prices will increase due to the 28% GST rate. In turn, costs for infrastructure and housing which are highly dependent on cement, will also increase.
 
Basic items such as Kumkum, alta, puja samagri, bangles (except those made from precious metals) are exempt from GST which will lead to a decrease in their prices. 
 
Five-star hotels will attract 13% more tax, up from 15% to 28%.

Tags : GST impact household budget Indian tax system Budget Indian Tax Arun Jaitely


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