Welcome to the era of GST. A system which is touted to be the biggest economic reform in independent India has set tongues wagging across media. But amidst this commotion of ‘One Nation One Tax’, you must know some facts and figures that will change your day to day shopping habits.
160 – countries have implemented GST. France was the first country to implement it way back in 1954 and after 63 long years later India has finally managed to achieve the epitome of simple taxation.
40 – is the number of tax levies (includes 17 types of taxes and 23 types of cesses) which have been merged into 1 single tax – GST. It will make your life hell lot of simpler.
4 – is the number of tax slabs proposed under the GST system. Items will be taxed on either 5%, 12%, 18% or 28%. There is a provision for maximum tax limit of 40% on certain items.
As in the case of every policy, even GST has resulted in two outcomes. While certain items and services have turned costlier, the prices of others have decreased considerably.
And now I come to the point. How good is GST for you?
In Indian states, the tax charged on movie tickets ranged from 10% to 110%. This will boil down to 18% or 28% tax on movie tickets costing below Rs 100 or above respectively. If you live in a city like Mumbai where ticket prices included taxes as high as 50% earlier, a happy movie weekend is definitely on cards!
If you plan to treat your friends at a food joint, this piece of information is for you. Dining in b will cost you no less than 28%. While eating at normal AC restaurants would get little expensive at 18%, munching cookies at the bakery or snacking at non-air conditioned eateries would turn a cheap affair for you at 12%.
In general, traveling will not burn a hole in your pocket, you talk about air or rail. An economy class airfare now costs lesser at 5% from earlier 6% while business class fares are now taxed at 12% up from 9% earlier. Coming to Indian railways, a journey in first class or AC classes would attract 5% service charge marginally up from 4.5% charged earlier, while sleeper and other non-AC train tickets remain unaffected by GST.
Fashion & Clothing
If you are habitual to wearing readymade garments, 12% is the new tax rate against 5% earlier. But since the raw materials would get cheaper, the final buying price won’t skyrocket in the long term. Apart from this a pair of shoes costing you less than Rs 500 and other apparels costing less than Rs 1000 will turn cheaper in GST regime.
Think big or do not think at all. This is clearly seen in the case of new taxation impact on the automobile industry. The GST rate has been pegged at 28% excluding cess which will make small and medium-sized cars expensive. On the other hand, buying luxury cars and SUVs worth 50 lakhs can become cheaper anywhere between Rs 50,000 to 2.5 lakhs! Motorcycles and scooters will be aided by the revised taxes and turn cheaper.
Going for a holiday weekend or routine business trip? Then make a note of the same. Staying in hotels is set to get more economical. Earlier a room in luxury hotel costing Rs 5000 or above used to attract 28% tax will now be taxed only if the price is above Rs 7,500. This means 18% GST will be levied on hotel rooms in the range of Rs 2,500-7,500 which is still cheaper than the earlier effective rate of 21%.
All said and done, there are many essential items which are totally exempted from GST. For instance, food grains, cereals, milk and supplements, oil, vegetables, confectioneries, contraceptives, printed books, glassware, handicrafts and much more.
- GST is a welcome decision for all the corners, as there will be no price discrimination. All items will be available at same prices across the country.
- It will boost government revenue as more items have been covered under GST. This will ultimately accelerate business growth in India.
- It will save you and me from the complex taxation system, pave way for further transparency and make our lives simpler through ‘Good Simple Tax’ (it’s just a made-up acronym).