As India steps up for 'one nation, one tax', the ambitious goods and services tax (GST) is all set to be reality soon! The GST is expected to de-shackle India of its complex indirect tax structure and enable a single unified indirect tax structure including majority of the indirect taxes in India, which will reshape the indirect tax structure of India. But, how the ordinary customers would be impacted with the move? Here, we strive to achieve better understanding of the impact of GST on key sectors of the Indian economy and ripple effect of the same on ultimate customers.
Eating out to get expensive:
As the GST will implement, eating out may cost you more. For example, now, you pay on an average 18.5 per cent as service tax and VAT, if you spend Rs 1000 for eating out. So apart from the service charge, you usually have to bear the burden of Rs 1185. While, under the GST regime, it is expected that the rates can be fixed at 18 per cent or above. Your bill is set to go up, to at least 1200 rupees, at 20 per cent approximate tax rate.
Readymade garments to get cheaper:
As the GST will be applicable, buying clothes and fashion brands could be cheaper, as the effective excise duty i.e. 7.5per cent and VAT of average 5 per cent will be included in GST slab. So, if you buy a Rs 1000 T-shirt today, you pay 1125 including various taxes, while if GST is kept at 12 percent, then your final bill will be Rs 1120.
Phone bills to get expensive:
As the states are also expected to decide service tax rates, your phone bill may see escalation of taxes. So, now, you pay service tax of 15 percent on a bill of Rs 1000, finally pay Rs 1150, while post the GST, if the tax rate is fixed at 18 per cent then, you will need to pay at least Rs 1180.
Buying car is cheaper:
The tax experts believe that, not only buying car will be easier in different states with price similarity between manufacturing and non-manufacturing states, but it could be cheaper as well.
For example, a Rs 5 lakh car attracts excise duty of 12.5 per cent, which comes to Rs 6.25 lakh along with VAT roughly now. While, under the GST it is expected to reduce as much as Rs 35,000 if the rate is fixed at 18 per cent, so for you the price will be Rs 5.9 lakh rupees.
Buying phones to get expensive:
The countervailing duty and VAT comes to 12.8 per cent, if you buy an imported phone from the market. If the GST council decides to peg the rate at 18 percent, then for a Rs 10,000 phone for which you pay Rs 11,280 now, you will have to shell out Rs 11,800.
LED TVs to get cheaper:
As part of the Make in India initiative, the GST is expected to be lower, so watching TV could get cheaper. Currently, you pay around 24.5 per cent tax for Rs 20,000 LED TV, total around Rs 24,900. As the GST rate is expected to be at 18 per cent, for you the cost will come down to Rs 23,600.
Jewellery to get expensive:
As per the GST model, at least 6 per cent effective taxes could be imposed on jewellery which is only 2 per cent at present, it could impact the jewellery purchase.
Online buying:
The e-commerce industry comes into a tax net, which will have to pay tax deducted at source for every purchase from its sellers, buying shoes, bags, electronics online could get more expensive.
Also Read: GST Bill: India steps up for one nation, one tax!
- Nandini
