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  1. GST impact on common man in just 7 easy to understand points

GST impact on common man in just 7 easy to understand points

The Lok Sabha today was locked in a marathon seven-hour debate which will hopefully end in the passage of the GST Bill. Since August of last year, when the 122nd Amendment was passed by the Rajya Sabha, the country has been preparing to change the way it pays taxes.

By: | Published: March 29, 2017 6:30 PM
GST or Goods and Services Tax is applicable on supply of goods and services. It will replace the current taxes of excise, VAT and service tax.

The Lok Sabha today was locked in a marathon seven-hour debate which will hopefully end in the passage of the GST Bill. Since August of last year, when the 122nd Amendment was passed by the Rajya Sabha, the country has been preparing to change the way it pays taxes. The proposed date for GST implementation is the 1st of July, and if you have been wondering what the fuss is all about, hopefully our seven-point introduction to GST will save the day:

What is GST?
GST or Goods and Services Tax is applicable on supply of goods and services. It will replace the current taxes of excise, VAT and service tax.

Why is GST needed?
Currently there are different VAT laws in different states. This creates problems, especially when businesses sell to different states. Also, most businesses have to pay and comply with 3 different taxes – excise, VAT, and service tax.

GST will bring uniform taxation across the country and allow full tax credit from the procurement of inputs and capital goods which can later be set off against GST output liability. This reform gives equal footing to the big enterprises as well as SMEs. The aim of GST is thus to simplify tax hurdles for the entire economy.

Who will have to pay GST?
GST will be paid by all manufacturers and sellers. It will also be paid by service providers such as telecom providers, consultants, chartered accountants etc. However, being an indirect tax, GST will be ultimately borne by the end consumers, just like in the current process.

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What kind of GST will be implemented in India?
India will implement the Canadian model of Dual GST, i.e., both the Centre and State will collect GST. There will be 3 types of GST:
CGST- Collected by Centre
SGST- Collected by State
IGST- Applicable on inter-state sales. It will help in smooth transfer between states and the Centre.

What will be the GST rates?
The GST rates have not yet been passed by the Lok Sabha. The proposed rates are:

5%,12%, 18%, 28% (+luxury cess).

Slabs New GST rates Current rates Products
1 5% Upto 9% Edible oil, spices, tea, coffee
2 12% 9%-15% Computers, processed food
3 18% 15%-21% Soaps, oil, shaving sticks
4 28% 21% Luxury goods

(luxury cars, tobacco, aerated drinks)

 

Food grains will have 0% tax to provide relief to consumers.

How will GST impact you?
Expect reduction in prices of :

  • FMCG goods such as shampoos, chocolates
  • Eating out
  • Small cars
  • DTH

Increase in prices of:

  • Luxury cars
  • Tobacco
  • Aerated beverages
  • Textiles

Are there any disadvantages to GST?
Change is never easy. Other countries which have implemented GST before India have faced inflation and price hike during the transition period. However, there are anti-profiteering measures in the GST bills which will keep price hikes in check and stop the economy from blowing over.

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Once GST is implemented, most of the challenges of the current indirect tax regime will be a story of the past. India will become a single market where goods can move freely across state borders, compliance will be easier, and costs of daily goods will reduce.

(The author is Founder & CEO, ClearTax.com)

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  1. P
    Prasad
    Sep 10, 2017 at 10:21 am
    Modi is cleverly all people happiness as he is giving burden to common man as Ian really feeling bad now for giving my vote to BJP , now feeling congress is far better they use to eat money from big people and scams but it never affected common man modi is doing both worst pm ever
    Reply
    1. S
      sahib
      Aug 11, 2017 at 11:45 pm
      Nice explanation for the topic. Easy to understand. Great usage of GST.disadvantages as well as Merits are explained very well..😊😊😊
      Reply
      1. S
        SEema
        Aug 10, 2017 at 7:01 pm
        Here, Is GST good or bad for common man is not discussed. But the remaining concept is nice.
        Reply
        1. S
          shubham jain
          Jul 13, 2017 at 8:05 pm
          Thankyou fir giving info abot GST effect on common man
          Reply
          1. R
            Rekha
            Jul 7, 2017 at 5:03 am
            Now GST have implemented finally with great ceremony of central hall. The discussion and debates have started on the possible hike in the prices of different commodities. There are four rates of GST is proposed 5 , 12 , 18 , and 28 . If we see the items lying under these categories, aewe find that similar nature of products having two different rates. For example Milk, if it is without packed will have 5 GST rates and if it is packed will have 12 . Now, if a consumer will buy packed milk, it has to bear the burden of a total of 17 GST because A seller who sells unpacked milk to seller B, has to pay 5 taxes, which will be included in the base price. After that seller B will who pack this and sells it will further impose 12 tax. Here, seller B will claim 5 as input credit but will not be in position to transfer it to common man. So a customer will keep on bearing the burden of 17 to 40 taxes on different occasions. So congratulations my dear costumers for your days ahead.
            Reply
            1. S
              shashank
              Jun 30, 2017 at 12:31 pm
              what will be impact on real estate i.e service tax etc and stamp duty and registration what will be actual cost impact of an item to a consumer i.e passed from manufacturer to consumer thru various chain of supplier
              Reply
              1. M
                mahadevan
                Jun 29, 2017 at 3:21 pm
                Acha dhin aanewala hai suna. Expecting the same for the last 3 years. Kabhi aayega patha nahi sub election stunt hogaya. Nothing is changing.
                Reply
                1. G
                  ganapati
                  Jun 22, 2017 at 10:10 am
                  anybody please explain how it benefits common housewife. retailers are telling that prices will ris from july 1st. kindly explain how it benfits to a common man
                  Reply
                  1. K
                    kiran
                    Jun 19, 2017 at 11:23 am
                    nice concept
                    Reply
                    1. K
                      kashish batra
                      Jun 12, 2017 at 11:37 am
                      it will be a good change as it will lead to equality between every state this wolud also give a great support to the common man as it wolud lead decrease in the common good.
                      Reply
                      1. B
                        Basanta Kumar Biswal
                        Jun 30, 2017 at 3:34 pm
                        Basanta kumar Biswal Hope that due to implement of gst customer was very satisfied
                        Reply
                        1. R
                          rekha
                          Aug 29, 2017 at 6:56 pm
                          nice answer
                          Reply
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