How GST - Goods and Services Tax - will impact your monthly budget..? - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Tuesday, July 18, 2017

How GST - Goods and Services Tax - will impact your monthly budget..?

How GST - Goods and Services Tax - will impact your monthly budget..?

by Ms. Saloni Roy, Deloitte Haskins and Sells LLP

The goods and services tax (GST) has brought a plethora of taxes such as service tax, VAT, excise duty, entry tax under one single tax net.

The question in almost every consumer’s mind is what will be the impact of GST on his day-to-day life.

1. Food items..!

Starting with everyday food items, products such as milk, cereals, fruits, breads, vegetables and the like will not be attracting GST. Packaged food items (such as cuppa noodles, instant rajma chawal) would become marginally cheaper in the GST regime, while dry fruits (except cashews and raisins), dates and the like are comparatively expensive with 12% GST from the currently tax rate of 5% to 6%.'

Chocolates and glucose biscuits, too, will be taxable at a slightly higher rate under GST whereas premium biscuits should be marginally cheaper.

2. Apparels, footwear, gold..!

Moving to other essential items, apparels valued below Rs 1,000 will be taxable at 5% GST whereas, those above Rs. 1,000 will be taxable at 12%.
Similarly, footwear costing below Rs. 500 would become relatively cheaper attracting 5% tax and those above would attract 18%, making them dearer.

On the downside, consumers buying gold jewellery might have to shell out slightly more with the rates going up marginally.

Stepping further towards luxury items, cars are about to get cheaper by at least 3% with the exception of hybrid cars that could become expensive. Mobile phones would also become more economical henceforth.

3. Housing sector..!

The housing sector is another area where everyone is waiting to see the impact of GST. With a comparatively more efficient tax structure in the GST regime, it is expected that real estate prices will come down.

Therefore, all those in a fix about the higher rate to be suffered in their next instalment may take a breather as builders charging higher tax could be scrutinised. 

Ready to move in flats/ buildings will not attract any GST, similar to the current regime.

4. Higher education...!

Tax on higher education cannot escape discussion as more than half of the billion-plus population of our country is the youth. The government has retained the exemption of tax on services rendered by an educational institution.

However, for services received by an educational institution beyond the higher secondary level, there would be a marginal increase in the cost of services.

The reason for this is that services rendered to such institution are exigible to GST and the same can not be set off against the exempt output tax liability, viz. education service to students and hence, this precludes them from taking the credit on services such as security services, transportation facility and the like, adding to the cost of service, eventually to be borne by the students.

5. Entertainment, eating out..!

Moving on to entertainment, all those inclined to visit restaurants and cinema halls can heave a sigh of relief as the effective rate would fall by minimum 2-3% in both the cases.

Some of the areas where the commonly used services are about to increase only marginally are beautician services, banking and financial services (such as insurance) and telecom bills.

What should also be noted is that, what the consumers see is the final tax leviable. However, there are various other taxes embedded which are not apparent on the invoice.

Therefore, with the revamped tax structure, the overall impact has either been neutral or positive in majority of the cases.

About the author..!

Ms.. Saloni Roy is senior director, Deloitte Haskins and Sells LLP. Inputs from Anjana Verma, manager and Amrit Sandhu, deputy manager, Deloitte Haskins and Sells LLP
How GST - Goods and Services Tax - will impact your monthly budget..? Reviewed by S Chitra on July 18, 2017 Rating: 5 How GST - G oods and Services Tax  -  will impact your monthly budget..? by Ms. Saloni Roy, Deloitte Haskins and Sells LLP The goo...

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