The Goods and Services Tax or GST, India’s historic tax reform will be rolled out from tonight. The new tax structure, after the GST launch will irreversibly affect the prices of all kinds of products. The GST has subsumed central and state taxes inevitably changing the indirect tax landscape of India from July 1. While the actual impact and effect of the massive reform can be guaged some time after its implementation, the immediate effect will be: cheaper, costlier and same priced products. While a few products may weigh heavily on your pockets, there will be some which may calm down your nerves and there will be no change in others.
The GST Council has made four primary tax rate slabs for various items – low rate of 5 percent, standard rates of 12 percent and 18 percent, and high rate of 28 percent. Some of these products had higher effective tax rates before GST implementaion but the new tax policy will lessen the burden on consumers. Meanwhile there will be some products which will now be taxed at a higher rate, thereby increasing their prices. However, it must be noted that the government has kept essential items of daily use tax free, that is, either at zero tax rate or completely out of the ambit of tax under GST. There is a huge number (1,211 items and 600 services) put under the tax brackets, and it may be a burden to keep a track of all of them, here are a few things whose price will increase or decrease or stay the same after the GST rollout.
Cheaper under GST: Food: Unpacked foodgrains, unbranded atta, maida, besan, fresh vegetables and fruits, salt, food at small restaurants, cutlery, ketchup, sauces and pickle. Personal Care: Soaps, hair oil and toothpaste. Travel and Auto: Airfares for economy class travel, bikes or scooters with engine capacity below 350 cc and SUVs. Household: Pressure cookers and pans. Entertainment: Movie tickets that cost less than Rs 100. Hotels: Rooms at non-luxury hotels and hotels with tariffs of less than Rs 7,500. Others: Footwear and Apparels, Weighing machinery, UPS, revenue stamps.
Costlier under GST: Food: Tea and coffee, food at fine dining restaurants or those inside five-star hotels. Personal Care: shampoos and deodorants. Travel and Auto: Airfare for business class and train tickets, bikes which have an engine capacity of over 350 cc. Household: TVs, refrigerators, ACs, washing machine. Entertainment: Movie tickets above Rs 100. Hotels: Hotels which have room tariffs over Rs 7,500. Courier services, mobile phone tariffs, insurance premiums, banking charges, broadband services. Sin: Aerated drinks, tobacco and luxury goods. Others: Mobile bills, tuition fees, salon visits and buying a flat or shop.
Tax free items: There will be no tax imposed on items like: Salt, eggs, milk, buttermilk, unpackaged curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, lassi, unpacked paneer, fresh meat, fish, chicken, palmyra jaggery, hulled cereal grains, unbranded and unpackaged tea and coffee, vegetable oil, children’s picture, drawing or colouring books, muddhas made of sarkanda and phool bahari jhadoo, jute, kajal (other than kajal pencil sticks), bindi, sindoor, bangles, handloom, stamps, judicial papers, printed books, newspapers, unbranded dried leguminous vegetables, silkworm laying, raw silk, silk waste, uncarded or uncombed wool, Gandhi topi, khadi yarn, coconut, coir fibre, unspun jute fibres, Indian national flag, Puja items, prasad, contraceptives, hotels and lodges with tariff below Rs 1,000, education and healthcare services.