It is happening, the Goods and Services Tax (GST) will be implemented across the country from 1st July 2017. Everyone is going to get affected, some in a good way some in a bad way. Here, I have compiled a list of 5 ways your life will change after GST.
Before we do that, why don’t we take a quick look at what GST is, for the uninitiated ones. So there are two types of taxes in India, first is direct tax and second is an indirect tax. Direct tax is income tax, yes, the one that gets deducted from your salary every month. And indirect taxes are rest of the taxes like Service Tax, VAT, Excise Duty, Customs Duty, Entertainment Tax, Luxury Tax etc. these are the taxes that you indirectly end up paying whenever you make a transaction. Now since the list of indirect taxes is quite long and they differ vastly state wise, it becomes very complex for the government and taxpayers to manage them. This leads to inefficiencies, loopholes, and ways for people to escape them.
That’s why the government wants to implement one indirect tax across the country called as GST. This tax will replace all the indirect taxes and make things easy for everyone. Well, it sounds simple but that’s not the case, there are many details that I have not mentioned here. However, I have focused on things that will have an effect on your day to day life. So here you go
1. Cheaper stuff!
Yes, currently there is a tax for every stage, be it at raw materials, production, wholesalers or retailers everywhere there is some sort of tax. So for a product that has paid excise duty at the time of procuring raw materials is also liable to pay VAT at the time of retail, that means tax is paid twice. And none of it can be claimed back from the government. Whereas in GST the taxes paid at earlier stages can be claimed by the taxpayers.
2. Costlier calls and data
Unfortunately, the tax applied on telecom services is increased from 15% to 18%. So now that data recharge will cost more!
3. Tricky clothes!
There is a twist here. Clothes that cost less than INR 1000 to produce will be taxed at 5% but the ones more than that will be taxed at 12%. The hunger for discounts is greater than ever now!
Before GST, the taxes applied on clothes range from 5.5% – 7.5%.
4. Cheaper houses. Maybe!
This one is slightly complicated. Builders/contractors will get the raw materials at lower prices dues to the unification of taxes but whether they will pass on this benefits to buyers remains to be seen. However, GST will definitely bring in a lot of transparency in this sector.
5. If you wanted that Veyron, go for it!
While there will not be a lot of difference in small cars, sedan, or SUVs. However, if you wanted to buy any high-end luxury car, then you’re in luck. After GST, the prices of high-end luxury cars are likely to fall by 5-6%