Featured Image Caption: GST w.e.f. 1st July 2017
India is set to witness its biggest ever tax reform in the form of the Goods and Services Tax (GST) which will be rolled out on the 1st of July, 2017. There will be a major impact on average household budgets. Monthly expenditure will change slightly and this can be understood through analyzing several scenarios.
The average impact on the monthly budget of a family that earns anything between Rs.50-80,000 every month will be quite marginal, i.e. only a few hundred rupees extra. For example, this family will have to pay more when it comes to home expenses and education since these two services will attract the 18% GST rate. Other expenses include EMI for two-wheelers, packaged foods, entertainment and toiletries, which will go down since GST rates have been reduced on these services.
The average impact on the monthly budget of a family of four people that earns around Rs.80, 000 every month will be almost similar with the extra expenditure being only a few hundred rupees extra. For a family of four earning around Rs. 1.75 lakhs per month, the average impact will be a little more as compared to the families who are earning less than Rs.1 lakhs. Besides spending more on home expenses and education, the families will have to pay more in case of branded goods and toiletries.
Services like telecom and banking will become more expensive as will apartments, mobile phone bills, ready-made garments and tuition fees. From the 1st of July, you have to pay 18% as taxes when you eat in an air-conditioned restaurant while the taxes will be 12% for non-air conditioned restaurants. Salon visits, mobile bills and tuition fees will be costlier by 3% since GST at 18% will be charged on all services from the 1st of July, 2017 in comparison to the present service tax rate of 15%.
Garments priced above Rs.1,000 will come with 12% tax in comparison to the present 6% state VAT. Garments priced below Rs.1,000 will attract GST at 5%. In the GST regime, purchasing a shop or flat will attract 12% GST in comparison to the current rate of around 6%. With 81% of items falling in/below the 18% tax bracket, items that will become cheaper include mayonnaise, salad dressings, static converters (UPS), weighing machinery, winding wires, electric transformers and two-way radios (walkie-talkies) among others. Revenue or postage stamps will also become cheaper since GST has been lowered to 5% on these.
Sauces, cutlery, ketchup and pickle will also become cheaper under GST since they will be taxed at 12%. Children’s picture, coloring or drawing books, salt and cereal grains have earned exemption from GST. Chess Boards, Playing Cards, Carrom Boards and other board games have also seen GST rates reduced to 12%. Rough semi-precious and precious stones will be taxed at an exclusive rate of 0.25% under GST.
LOVELEEN K GUPTA
ACTUALLY GST WILL CUT DOWN THE COST OF MOST OF THE GOODS USED IN DAILY HOUSE HOLD ITEMS IN LONG TERMS .
ALSO IT WILL ALSO BOOST INDIAN ECONOMY AND WILL INCREASE ECONOMIC GROWTH 2%+ CURRENT GROWTH .
FROM BUSINESS POINT OF VIEW ONCE A BUSINESS MAN ENROLLED ON GST HE WILL HAS LOTS OF EXTRA TIME TO LOOK AFTER HIS BUSINESS BESIDE LOOKING INTO PAPER WORK, THERE WILL NO STATE CHECK POST STATE WISE , SO IF YOU ARE SENDING SOME GOODS FROM ONE STATE TO OTHER STATE THERE WILL VERY LESS TIME AS COMPARED CURRENT SYSTEM THAT WILL ULTIMATELY CUT DOWN THE COST AND EXPENDITURE.
SO BOTH BUSINESS MAN AND CUSTOMER WILL BE BENEFITED.