It’s been a little over 5 months getting administered under goods and services tax (GST), which was launched by the Prime Minister Narendra Modi on July 1, 2017. The PM, by launching the same, has signaled a paradigm shift in the indirect tax culture of India as the country was earlier reeling under the multiple tax regime. GST, which subsumed more than a dozen of state and central level indirect taxes, was rolled out with four different rates. The GST rates in India are 5%, 12%, 18% and 28% – applicable for several goods and services.
Call it the complication or the government’s efforts to smoothen the functions of business enterprises across the country, the GST council has constantly rejigged the rates in its monthly meetings. Although the business enterprises are paying the GST, it is getting recovered from your pocket. And therefore, it impacts your wallet some way or the other. Let’s see what the GST rates have in store for you.
Shift of 177 Products from 28% to 18% Slab Gives Your Pocket the Much-needed Relief
In its recently concluded meet on November 9 & 10, the council took a massive decision by shifting as much as 177 products from the top tax bracket of 28% to 18%. The products include shaving cream, aftershave kits, beauty products, handmade furniture, chewing gum, plastic products, binoculars, shampoo, among others. Looking at the list of products, one can say your daily needs are taken care of by the government.
Feel Free to Eat Out as GST Incidence Comes Lower
In a big relief for those wanting to dine at restaurants, the government has lessened the GST tax rate to 5% from the earlier level of 18%. The rule came into existence on November 15. So friends, eat with gusto at restaurants as the cost has fallen drastically with the tax getting lowered.
Unbranded Medicines, Textile Products & Others Become Cheaper
Unbranded ayurvedic medicines, which were earlier taxed at 12%, have now come down to 5%. Similarly, yarn and clips, which were earlier attracting a levy of 18% GST, has now fallen to 12%, making textile products cheaper for the customers to buy. Further prospering the textile business in the country, the government has eliminated the requirement of GST registration for small handicraft traders with a turnover below ₹20 lakh. In addition, the rates of several job work items have been cut to 5% from the earlier 12%.
Even though the council has reduced the burden of taxes on the GST impact on common man, there are some items which would pinch the wallet of consumers.
Cess Drama on Cars Puts GST Incidence at Pre-GST Levels
Cars are sitting at the top GST tax rate slab of 28%. But what makes their ownership further costlier is the addition of cess post 28% tax. At the official launch of the GST, the cess on mid, large and sports utility vehicles (SUVs) was 15% for these car types. With the addition of cess, the tax rates were 43% across these vehicles, But this all changed when the GST council, in September 2017, decided to hike the cess on these cars. The cess on mid, large and SUVs was hiked by 2%, 5% and 7% to take the overall tax rates to 45%, 48% and 50%, respectively.
Loans Become Slightly Costlier
You must be knowing that a loan bears a charge of processing fee which further adds tax component on it. Before GST, a service tax of 15% was getting charged on the fee. Post the implementation, the 15% has got elevated to 18%. Credits like personal loan, home loan and car loan have thus become slightly expensive. If a loan carries a processing fee of say ₹10,000, you had to pay ₹1,500 service tax on it before the introduction of GST. So, the total processing fee used to be ₹11,500. Now with 18% GST, the tax is a tad higher with ₹1,800, taking the total processing fee to ₹11,800.
In a nutshell, GST has transformed the lives of the common man by reducing the rates on essential goods, as well as a few services. And with the council meeting taking place regularly, speculations of further rate easing are getting rife with the days.