What will cost more and what will be cheaper for you: All You Need To Know About The GST Bill

April 05, 2017 15:24
What will cost more and what will be cheaper for you: All You Need To Know About The GST Bill

The Government is all set to put into the Goods and Services Tax (GST), effective from July 1, of its revised deadline.

Previously, the deadline of April 1, was changed due to differences over power sharing and revenues. Moreover, four key legislations - the Central GST, Integrated GST, Union Territory GST, and the Compensation GST, have already been passed by the Parliament.

The GST, which has widely been regarded as a One Nation, One Tax regime would create a single nationwide market. Further, the GST will pull down India’s gross domestic product (GDP), by up to 2%.

While in the long-term, GST should have quite a favorable impact on the most sectors of the Indian economy, and the short-term impact, as in the case of most reforms, may be limited.

Most of the services, under the GST, may turn out to be more expensive. And for goods, there may be a mixed trend, as far as their prices are concerned.

Below are some key facts on what will be costlier and what will cost less for consumers.

Some services

The important services, like mobile phone bills, renewal of premium for life insurance policies, banking and investment management services, in the short-term will cost more. Also, luxuries like Wi-Fi, and DTH services, online booking of tickets, will also cost more.

Essential Services

Initially, some services are also likely to be costlier. Residential rent, availing health care benefits, school fees for children, some courier services, traveling to work by metro or local trains, may also become more expensive.

White goods

White goods, are not getting a larger hit. It is expected that, there will only be a 2-3% plus, or minus impact, on white goods, like television sets, washing machines, cooking appliances like stoves etc.

Aerated Drinks and Sin Goods

The Government has recommended higher tax rates for sin goods, which essentially include, aerated drinks, cigarettes and tobacco products. Where a higher rate of around 40%is proposed on aerated drinks, the same may witness an increase in their prices.

Services that may get cheaper in most states

The prices of movie tickets and theatrical performances may become cheaper in most of the States. Even dining in restaurants, may also become pocket-friendly in most states.

Essential goods, certain vehicle categories likely to be cheaper

An exemption or a lower rate is prescribed for essential goods. Further, under the GST regime, depending on the current supply chain arrangement and state of operation, the following may become cheaper:

- Two-wheelers

- Entry-level sedan (except small cars)

- SUVs and luxury or premium cars

These rates are subject to an upcoming change, as the all-powerful GST council has still not categorized various goods and services under the four-tier regime. The GST proposes a lower 5%, two standard tax rates of 12 and 18%, and a peak rate of 28%.

Also, the GST Council has included a peak rate of 40%, only as an enabling provision. This is done, so that the Council, does not need to approach Parliament, in future, if there was a need for a higher tax rate.

New Income Tax Rules Formed; President Pranab Mukherjee Gives Approval

By Supraja

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