After the passage of the GST Bills last week in the Lok Sabha, the biggest tax reform in India, Goods and Services Tax is all ready to come to light very soon. This is touted to be a reform which would possibly reduce transaction costs of business by creating a single nationwide market, which GST is anticipated to offer. One Nation, One Tax as the tagline of GST goes, this tax slab is meant for bolstering economic growth.
Prospects of GST will increase Gross Domestic Product by 2%, at least for the short term and it may emerge as a mixed bag for common men. While the majority of the services might turn out to be costlier than before, it may even be a jumble for various goods. In the long run, GST will have a favorable impact on the majority of the sectors in the Indian economy. Let’s take a look at the predicted impact of GST on the pocket of a layman.
Few services which will become costlier
A layman should, until the time the industries don’t pass the benefit of increased credits, the budget for few increased pocket pricking on few essential devices like:
- Mobile bills
- Investment management and banking services
- Renewal premium for life insurance policies
- Basic luxuries for common like DTH services, Wi-Fi and online ticket booking can also become more expensive
Prices of these services will also possibly increase:
In the backdrop of current exemptions subsiding, there are many essential services which can cost you an arm and a leg under the new regime of GST. For instance, the present exemptions will be discontinued.
- Health care
- Residential rent
- School fees
- Courier services
- Commuting by rail or metro will also become costlier
Services to get cheaper in majority of the states
- As entertainment taxes get included in GST, prices of movie tickets and theatrical performances can become cheaper in majority of the states
- Dining in hotels and restaurants can also soon become wallet-friendly in majority of the states
Essential goods and specific categories of vehicle will be cheaper
In terms of goods, a lower rate will be prescribed for necessary goods, GST is expected to improve the house economics as a whole. Under the GST regime, depending on the present supply chain arrangement can become cheaper:
- Entry-level sedan
- Luxury of premium cars and SUVs
Sin goods and aerated drinks prices will probably jump
The government aligned with its negative outlook as it proposed higher taxes on sin goods which definitely includes cigarettes, aerated drinks, and other tobacco products. An even higher rate of 40% is proposed on aerated drinks and the same can be witnessed in the increase in prices.
While the above predictions are mostly based on the information that is released, we have to wait for the final fitment structure to be released by the government where it sets categorized rates on different goods.