New Delhi, July 1, 2017: The Goods and Services Tax (GST), India’s biggest tax reform since Independence has finally rolled out past midnight Friday.
The GST Council has bracketed all the goods and services in the country in five categories – 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent.
However, some of these products had higher effective tax rates before the GST and the new tax regime will reduce the burden on consumers, some of the items will now be taxed at higher rate. While 7 percent of the items come under the exempted list, 14 per cent fall in the 5 percent tax slab, 17 per cent in the 12 per cent slab, 43 per cent under 18 per cent tax rate and only 19 percent of the items will fall under the highest 28 per cent tax slab in the new regime.
Now, after the ‘One Nation, One Tax’ under the new Goods and Services Tax (GST) regime finally becomes a reality from July 1, the consumers have only one thing in their mind that what will get cheaper and what will cost more.
Here is all you need to know what’s getting cheaper and what’s getting costlier:
Food related products:
Cheaper under GST: The Union Government have exempted most of the food items from tax under the GST, while others fall in lower tax category of 5% or 12%. Under the new GST, rules unpacked foodgrains, unbranded atta, besan, maida, fresh vegetables, salt and fruits will get cheaper as these items have been exempted from tax under the new tax reforms. Apart from the above-mentioned items, processed food items which fall under 5% tax will also get cheaper.
Costlier under GST: Branded coffee, tea and spices will be taxed at 5 percent. Currently, these items are taxed at the rate of 3-4 per cent.
Cheaper under GST: Footwear and clothing have been put under different tax slabs ranging from 0 to 18 per cent. But most of them will get cheaper under the new tax scheme.
Costlier under GST: Purchase of garments and apparels up to Rs 1,000, come under 5 per cent GST tax slab, beyond which they will be taxed at 12 per cent. The same rates will be applied for other readymade apparel such as salwar kurtas, dresses, skirts, tops and jeans, reports Businessline.
Personal care products:
Cheaper under GST: Products like soaps, hair oil and toothpaste will become cheaper at 18 per cent tax, as previously they were taxed at 24-28 percent.
Costlier under GST: Products like deodorants and shampoos will become more expensive after implementation of GST.
Cheaper under GST: Household items such as pressure cookers and pans will get cheaper as they will be taxed at 12 per cent GST rate, much less than the current 19.5 percent rate.
Costlier under GST: All home appliances like television, refrigerator, air-conditioner and washing machine will attract a 28 per cent tax rate, higher than the existing rate of 23-28 per cent (depending on the state where taxpayers live).
Cheaper under GST: The effect of GST on hotels will vary from segment to segment. However, non-luxury hotels and hotels with tariffs of less than Rs 7,500 are expected to get cheaper under the new tax reforms.
Costlier under GST: Hotels that have air condition and serve liquor will come under 18 per cent GST. Hotels with room tariffs between Rs 2,500 and Rs 7,500 will also fall under 18 per cent GST. Hotels with room tariffs above Rs 7,500 and 5-star hotels will come under 28 per cent GST, making the stay costlier.
Cheaper under GST: Having dinner or lunch at small restaurants will also cost less after the implementation of GST. Small restaurants have been placed under the 5 per cent tax bracket under the new GST rates.
Costlier under GST: Restaurants inside five-star hotels and fine-dine restaurants will cost more.
Cheaper under GST: Tickets under Rs 100 will get cheaper in most states with a new rate of 18 per cent. Most states charged 25-30 per cent tax on movie tickets.
Costlier under GST: Cinema ticket above Rs 100 will cost more with 28 per cent GST. However, the impact will be different from state to state depending upon the existing rates of entertainment tax.
Cheaper under GST: Bikes or scooters with engine capacity 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.
Costlier under GST: Two-wheelers with an engine capacity of more than 350 cc and three-wheelers will become costlier with the implementation of the GST.
Cheaper under GST: Airfares for economy class travel are expected to go down after GST implementation. These tickets have been placed in the 5 percent tax bracket under the GST.
Costlier under GST: Airfares for business class and first class train tickets will cost more. This has been placed in the 12 percent tax bracket.
Cheaper under GST
- Postage or revenue stamps will also become cheaper as GST on these has been reduced to five per cent.
- With 81 per cent of items falling under below 18 percent tax rate, certain goods that will become cheaper are salad dressings, mayonnaise, weighing machinery, static converters (UPS), electric transformers, and winding wires.
- The tax rate on cutlery, ketchup, sauces and pickle under GST will likely become cheaper as they will be taxed at 12 percent.
Costlier under GST
- Services: Courier services, mobile phone tariffs, insurance premiums, banking charges, broadband services will get costlier as they will come under the 18 percent tax bracket. Earlier there was a service tax of 15 percent on such services.
- Sin products: Taxes on aerated drinks, tobacco and luxury goods will now come under the 28 percent tax bracket under GST, so it will get costlier.
- Mobile bills, tuition fees and salon visits will also get costlier by three per cent, as GST at the rate of 18 per cent will be applicable on all services from July 1 as compared to the current service tax rate of 15 percent.
- In GST regime, buying a flat or shop will attract GST of 12 per cent as compared to current six per cent approximately.
- Building Construction: Cement, steel and other raw material used in building construction will become costlier under the GST.