The Goods and Services Tax (GST) has been introduced to the country and is in function since July 1st, 2017. GST is expected to replace numerous taxes like excise duty, Value Added Tax (VAT), commercial tax, entertainment tax, surcharges and more across all the states in India. Knowing that GST will come into the act soon, the government of India had started announcing GST rates from May 2017. Now after GST implementation from July 1, 2017, some of the things have become expensive, and some cheaper.
Things That Have Become Cheaper Following GST Implementation
There is a big relief for middle-class people as goods and services tax will not be applied to essentials like pulses and grains. 66 items have been shortlisted under reduced tax category by the government. These include movies tickets, cashew nuts, and insulin etc.
- The tax paid on insulin has come to 5% from its previous value of 12%, and similarly, the tax paid for nuts like cashew is reduced to 5% from 12%.
- Moreover, items like preservatives, pickles, and sauces will now be availed at 12% instead of 18%.
- Love movies? The movies tickets under Rs 100/- will now be levied at 18% instead of 28%.
- For the middle-class Indians, GST applied on the 66 essential items will provide them comfort from price hike worries.
- On the other hand, Fast Moving Consumer Goods Sector (FMCG) will be benefitted more with it.
- Moreover, to benefit the composition scheme, the annual turnover limit has been increased from Rs 50 lakhs to Rs 75 lakhs, giving smaller businesses a chance to reconcile and reducing the burden of compliance.
Furthermore, on behalf of the comments provided by the country’s finance minister, it is assumed that the auto companies manufacturing hybrid vehicles will be benefited from the high goods and services tax rates. Generally, we believe that by remaining responsive, the GST council is doing everything in its power to manage goods and services tax smoothly.
If you are worried about the fact that GST will eventually get under your skin, a cashback credit card can help you to avail 10% cash-backs. Alternatively, you can opt for a profitable fixed deposit product.
Things That Have Become Expensive After GST Implementation
- Smartphones – It is a big worry for Smartphone enthusiasts as, under GST, the Smartphone prices are hiked by 2%-4%, and this means that the smartphones will now be taxed at the interest rate of 12%. Moreover, 10% customs duty is expected to be imposed by the government on imported phones. If you are looking to buy a Smartphone under the reign of goods and services tax, it is necessary that you look for the retailers who offer good deals and discounts.
- Gold – Under GST, 3% is the rate set for gold, and with the inclusion of import duty of 10%, the total tax becomes 13% which is 1% more than before goods and services tax. Moreover, for the services provided by the jewelers, it will peg 5% tax for sales outside the factory premises. Thus, buying diamond jewelry can prove to be a costly affair.
However, with the taxes getting simplified, the gold supply chain will become obvious and competent, boosting the country’s economy. This in return will increase the gold demand. Key factors to focus on:
- The reaction of jewelers is positive despite 3% GST as it is lower than the expected one.
- The gold industry will be affected by two GST rates: Firstly- 3% on gold will replace VAT and excise duty but will be charged with import duty.
- Secondly- 18% service tax will be a concern for the small-scale artisans who manufacture and design jewelry for big manufacturers.
Goods and services tax has benefits too despite the overall hike in the taxes. It becomes easier for the jewelers to counterbalance the GST rates applied against their revenues and double taxation applied on the supplies is also removed.
- Cars – Under Goods and services tax, 28% is the rate at which the cars will be taxed, although according to the category of the car (sedan, SUV, small car, etc.), the tax can be levied at 3%-15%. Moreover, for new as well as used cars, the tax remains same which implies that buying an old car under GST will be an expensive affair. A car loan is a feasible option to buy car in case you fall short of cash for making the purchase.
- Online Shopping – After goods and services tax, the e-commerce companies will tend to collect tax on the products they sell, previously they didn’t. The e-commerce companies will now collect tax at 1% for the products they sell under GST. On the other hand, offers and discounts will also attract more tax.
Your online shopping experience is going to find a bitter end as the cost of online shopping is going to hike. This is because, on GST refunds and returns, the company will have to abide the taxes before they get it refunded from the government later on.
- Consumer Durables – On products like television and air-conditioners, the tax rate is likely to hike by 5%.
Thus, overall GST has brought respite to the people and will definitely prove to be beneficial for India. However, taxation has increased for some goods and services. But hopefully down the line, the growth of the nation’s economy will even out against increase in price of few goods and services.