GST’s Effect: How it will create a difference on monthly budget?

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NEW DELHI: Much awaited tax reform came up at midnight session in Parliament yesterday which is launched all across India in the name of GST. The Good And Service Tax(GST) is a single biggest tax reform undertaken by the country under 70 years of Independence. It is defined as an indirect tax which is levied on the consumption of goods versus a direct tax on direct income. It will replace central and state taxes such as excise duty, service tax, sales tax within a single tax structure.

There would be certain items that are going to be cheaper and the other ones will be getting expensive due to massive change in taxes. Some items are going to get cheaper, some more expensive while prices for certain services might also fluctuate. While rates of essential items such as salt, soap, toothpaste, wheat flour, tea, coffee, etc, has been reduced, prices of milk, bread, fresh fruits and vegetables, etc. have been not been changed. On the other hand, chocolates, shampoo, furniture, aluminium foil, courier services, etc, are set to become more expensive. Air travel, though, is expected to cost less after the tax reform.

Indian Prime Minister, Narendra Modi said the GST will end India’s multiplicity of taxes and the confusion, making India independent of the effect of cascading taxes. “It is Good and Simple tax.”

Under GST, goods and services is taxed at the following rates, 0%, 5%, 12%, 18%, 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. Things which will become more expensive after GST are Cold Drinks, Branded Flour, Ice Cream, Ayurvedic Medicines, Movie Tickets, Shampoo, Television, Telecom, Security, Maintenance, Hotel Rooms more than rs, 5000 & five star restaurants. Things which will become cheaper are – toothpaste, Edible Oils, Cheese, milk, rice, Noodles, Textiles, Mineral Water, Luxury Cars, Pens, Spectacles, Economy and Budget hotels, Notebooks, Detergent Powder and Sugar.

But, broadly speaking, GST is not expected to substantially increase your cost of living.

 

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