Costlier Or Cheaper Under GST?
India’s $2 trillion economy and 1.3 billion people will now be unified into one of the world’s
largest common market under the Good and Services Tax regime, which was rolled out
across the country on 1 July, 2017, in place of all other indirect taxes. As consumers we
need to be aware of GST, and how this tax is going to affect the cost of living of the
common man of India. Here is a comprehensive list of things which are either going to
get costlier or cheaper.
What will be cheaper?
Let’s start with the good news first. The GST tax on the following either fall in the 0%
bracket or the percentage is lesser than the indirect taxes imposed previously. Thus the
price of the following essentials as well as healthcare items are slated to see a fall in
price:
Food including fresh meat, eggs, milk, butter milk, curd, natural honey, fresh fruits
and vegetables, flour, gramflour, salt, prasad and bread will become cheaper.
Food grains will cost lesser.
Processed food items will be cheaper as the tax rates will be slashed from 15% to 5%
under GST.
Dining out will become less expensive as the tax has been slashed from 22% to 18 %.
Beauty items including Sindoor, kumkum, bindi, bangles, handloom,hair oil, soaps and
toothpaste.
Life-saving drugs that treat diseases like malaria, HIV-AIDS, tuberculosis, and
diabetes will fall in the 5% bracket and thus more affordable.
Contraceptives fall under the 0% category and thus will become cheaper.
Healthcare services by a clinical establishment, an authorised medical practitioner or
paramedics.
Services provided by way of transportation of a patient in an ambulance.
Electricity.
Stamps, judicial papers, printed books, newspapers.
Entertainment services like Movie theatres and amusement parks will become cheaper.
Airfares for economy class travel has been placed under the 5% bracket and expected
to go down under the GST.
With tax on branded good slashed from 23-24% to 18%, this category will become
more affordable.
Hotels will fall under the 18% tax bracket, 4% lower than the 22% charged previously.
Thus staying in hotels will become cheaper.
Entry level cars and two wheelers are going to be more affordable [Link]-wheelers
with engine size below 350 cc, some categories of commercial vehicles including three-
wheelers, SUVs will get cheaper under the GST. The tax rate varies from segment to
segment.
Apple has slashed the price of i-Phones.
Paint, cement, electrical items, consumer durables are expected to get cheaper.
More Expensive under the GST Regime
The following commodities and services are going to pinch one’s pocket under the GST
regime:
Beverages including tea, coffee and aerated drinks.
All kinds of Indian spices.
Luxury goods.
Tobacco products.
Mobile bills, insurance premiums, banking charges.
Internet, wifi and DTH services.
School fees, courier services and air tickets to get expensive.
Small cars will become more expensive because they fall under the peak bracket of
28%.
Of the commodities and services falling under the GST regime:
7 per cent will be exempted
14 percent will be in the 5 per cent slab
17 per cent in the 12 percent bracket
43 percent in the 18 percent segment
19 percent will go into the top bracket of 28 per cent.
States including Himachal Pradesh and Uttarakhand are bound to be adversely affected
under the new regime as these states previously enjoyed lower tax rates on the goods
produced there. However, the GST will erase this privilege that the states enjoyed till
now. The manufacturers in these states need to take actions such as adjusting production
capacity to bring down the impact.
Budget 2018: An analysis
February 2, 2018
by Usha [Link]
The budget 2018, which was released on February 1, has been mentioned as a pro-farmer
and pro-poor budget, but the middle-class salaried Indian has been largely ignored.
Although many were expecting a change in the income tax structure to bring down the
tax liability of individual taxpayers in the Union Budget 2018. But no change in individual
tax structure has been suggested in the budget. The government has proposed to
reintroduce the standard deduction for salaried individuals, which was abolished by the
Finance Act, 2005. However, the reintroduction of this benefit would not make too much
of a difference in the total tax outgo of individual tax assesses. It has been made available
in lieu of the existing medical reimbursement and transport allowances. Besides
reintroducing standard deduction, the finance minister did not propose any other major
relief in the direct taxes space. Besides this, cess on income tax has increased from 3 to
4 percent.
For small and medium businesses, measures like reduced corporate tax rate
The 2017 Budget saw a key initiative for small and medium-sized enterprises (MSMEs).
Finance Minister Arun Jaitley announced in the Lok Sabha today that the corporate income
tax rate for businesses with turnover less than or equal to Rs. 50 crore will get a 5%
reduction in corporate income tax. This means that the corporate income tax rate will
now effectively be 25% from the earlier 30%.
This move will help small and medium-sized enterprises considerably and provide more
impetus to small business owners to set up and grow their businesses.
Senior citizens
Senior citizens will have lower tax burden now. For senior citizens, the exemption of
interest income on deposits with banks and post offices has been increased from 10 k to
50 k and tax deduction at source will no longer be required.
Rural farmer and poor
Farmers will be benefited as there will be more electricity coverage in rural households.
Govt. has decided that it will allocate Rs 16,000 crores to provide electricity to rural areas
under the Pradhan Mantri Saubhagya Yojna. The government also said that support prices
for Kharif crops will be fixed at 50 per cent higher than the cost of production and has
raised the farm credit target for the next year.
Finance Minister has proposed health coverage of Rs. 5 lakhs per annum to 10 crore poor
and vulnerable Families under National Health Protection Scheme. This scheme will
provide benefits to 50 crores Indian Citizens.
Budget 2018 is an election budget and has kept the rural and poor section of the society
in consideration. However, the implementation and actual benefit that people get from
the budget may impact the outcome of the results of the 2019 elections.