Story Of The Week

GST- How it will affect you

The Goods and Services Tax (GST) is finally implemented, with mixed reactions of apprehensions and optimism. The new tax system has unified the $2 trillion economy and 1.3 billion people into one of the world’s biggest common markets. GST will bring more traders under the tax net and would also be used to identify people who were making money and are not paying income tax and it will also reduce disparities among the states which will lead to more convergence. The rollout of GST has given a new hope that India’s reforms are regaining momentum and the broader economy can only get better in future. On the other hand there is fear of disruption because of hurried transition that might not serve the interests of everyone in the country. Producers and sellers will get the benefit from transparent rules; there will be fewer tax filings and less cumbersome book keeping. Government will also be benefitted as they would earn more in revenues as leakages are plugged and tax base is increased.

There are many issues related to the implementation of GST as majority of traders and retailers are struggling to process transactions; there is very less clarity about the new system and protests are getting louder over high cost of compliance. Many businessmen seem confused about the new tax regime with some businessmen even refraining from selling and buying any products. Businesses are confused by the complicated structure which includes four tax slabs ranging from 5% to 28% and numerous exemptions. It is also not clear what sort of damage GST will inflict on the country’s fast-growing economy before they get the long-term benefits. Protests and strikes broke out across the country as the deadline approached. In the states of Tamil Nadu, Rajasthan and Gujarat textile workers went on strike, while the association that represents sellers of seeds, pesticides and fertilizers protested in Punjab. Across India less than 1% of people pay income tax and nearly 90 percent of workers are employed in non-taxed economy and many of them will be paying tax for the first time. As the literacy and digital knowledge in India varies so proper compliance with the registration and filing process is challenging.
Some of the biggest automakers announced price cuts. E-commerce industry is very optimistic that they will get more tax within the new tax regime, which will be shared with the consumers.
All such countries where GST is implemented, there are either two or three rates – one mean rate, a lower rate for essential goods and a higher rate for luxury goods. GST rates have been fixed for 1,000 items and the GST Council has taken care that the new tax slabs are as close to the current structure. Although there are four tax slabs 5%, 12%, 18% and 28% but most of the commodities fall in the 12% and 18% slabs.

Some of the products and services with zero GST effect:

zero GST effect

Some of the products and services to become cheaper after GST:

Toothpaste, Insulin, Sugar, Edible oils, Soap, Hair Oil, Milk, Rice, Packaged tea, Ice Cream, Textiles, Noodles, Agarbatti, Notebooks, Masala, Footwear, Sweets, Economy class air tickets, Motorcycles, hotels, Movie tickets cheaper than Rs 100, Cement, Pens, Mineral water, Luxury cars, Spectacles.

Cheaper after GST

Tech giant Apple has announced a reduction in the retail prices of iPhone, Apple Watch, iPad and Mac line of computers with a few exceptions. Under GST, the under-construction projects are going to attract 12% tax, which was 4.5% before the implementation of GST. This will push the market and there will be an increase in prices. Steel also attracts 18% GST, which will further increase the prices. GST rate on fertilizers was reduced from 12% to 5% and tractor components were cut 28% to 18%. Maruti Suzuki Ltd also dropped prices on some of its models by up to 3 percent, passing the entire benefit of GST rates to customers.

Some of the products and services to become expensive after GST:

Cold drinks, flour, Movie tickets greater than Rs 100, biscuits, AC restaurants, Television, Fridge, Air conditioner, Washing machine, TVs, Furniture, Watches, Cell phone bill, Bank services, credit card services, AC train tickets, Business class air travels, Telecom, five star hotel restaurants.

expensive after GST

On the first day of GST, large and small restaurant chains and cafes struggled to produce correctly printed bills mentioning GST and the GST registration number. Initially diners were not able to calculate their exact bills due to different slabs such as VAT, service tax, Krishi Kalyan Cess and Swachh Bharat Cess. Now we have to pay Rs 18 for every Rs 100 spent on food which makes planning our meal easier.



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