GST is probably the most searched keyword in Google after the Government Of India passed the bill in Lok Sabha. GST (Goods and Services Tax Bill) is expected to have a significant impact on every industry and customers across the sub-continent. It is expected to fill all the loop holes of the system and to boost the Indian economy.
GST is a single taxation system, that will eventually to reduce the number of various indirect taxes, it will also reduce prices for some products and services, the government will not charge GST like all the indirect taxes. However, the GST will also have some negative impact, that include, increased price of real estate by 8 percent, which is likely to reduce the market by 12 percent.
Already confused? Don’t be, here I’m listing out the impacts of GST just for you.
Reduction Of Tax
Now a days, the manufacturer has to bear the excise duty, and the end buyer has to bear the VAT. The standard rate of excise duty is around 12.5percent while VAT is around 14.5percent, so the end user ends up paying around 28 percent tax. With the GST in action, now the end user will have to pay much lesser taxes, which will eventually help to lessening financial load.
Elimination Of Multiple Taxation
Multiple taxation has always been a big problem in India. It is mainly due to a transaction is considered as a sale as well as a provision of service. As an example, now one has to pay both the service tax and VAT while eating out in restaurants, as the foods are considered as commodities and the A.C and seating arrangements are considered as service. So, at the end one ends up paying 100 percent on the value of the food, 40 percent on the value of the bill and even service tax can be levied at 15 percent. Under GST, as supply is a single taxable event, the multiple taxation will be eliminated. The elimination of multiple taxation will eventually result in reduction of prices.
To ensure that the benefit of tax reduction is passed on to the final consumer, an anti-profiteering clause has been proposed. The clause will help to reduce the product prices, which will eventually help end users.
However, there will be several things that is all set to become more expensive. So, here I’m listing out the products which will be expensive.
Now users pay 15percent service tax over the final bill of a phone. With GST in place, users will have to pay a fixed 18 percent tax, which will make phone bills a bit costly.
Banking and Insurance
Now services offered by banks are taxed at 14.5 percent, which are likely to get costlier once GST in place with 17-18 percent of taxation.
Now airlines charges around 6-9 percent service tax. However, GST will pump it further to 15-17percent.
Now buyers pay only 2 percent tax on jewellery, but GST will make sure that the buyers are paying 6percent tax.
Still there will be few things which will be cheaper and they are,
Now one must pay multiple taxes while buying a car. With GST in place the tax rate will be fixed to 18 percent, which will help to reduce price.
GST will help to reduce television prices with much lower tax rate of 18-20 percent. Whereas now buyers must pay around 24 percent tax.
Processed Food and Cement
Now the end users must pay 25 percent tax for both processed food and cement. With GST processed food will be taxed at 17 percent and cement will be taxed at 18 percent.
So here I’ve pointed out all the important points of GST and how it will affect you. First time it might look confusing but it is potent enough to boost Indian economy and the process of levying indirect taxes more streamlined.