Tanvi has been a full-time personal finance journalist and now leads a multi-faceted existence as a wife & mum, and now a Certified Financial Planner and wine sommelier.

GST – Impact on Consumers

Now that the GST rates are out for almost all goods, let’s see how this impacts your day to day life.

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1. Minimal impact on goods for personal consumption

Overall the GST regime is unlikely to make a major difference in the prices of consumption related products.

What will cost you less? 

GST has attempted to separately tax goods as those used by the lower income group and those consumed by the middle & higher income groups. Accordingly…

• Tooth powders, hair oils, soaps, washing soaps, candles and essential oils will become cheaper as rates come down from 26% to the GST tax slab of – 12% to 18%
• Kumkum and bindis will attract no tax, which will make them cheaper
• Mobiles phones, including smartphones and tablets, will cost lower as the GST rate is set at 12% to 18%, lower than the current rate of 26%. You can thank the digitalization  thrust that is powered by this government

• Essential commodities like sugar and edible oils will cost marginally lesser as tax is lowered to 5% from current 6%
• There will be no tax levied on health and educational services

What’s not so good? 

Sanitary napkins have been placed in the 12% GST tax slab. An item that should have been granted a tax-free status (clearly bindis seem to be more important!).This will impact a large number of women who do not have access to these products as they already find it difficult to afford them. 

What will cost you more?

• ACs, Washing Machines, Geysers, Televisions, Mobile Phones, Electrical Kitchen Appliances, Vacuum Cleaners will cost more-or-less the same, as the Pre GST rate is @28% (central tax of 12.5%, state tax of 13.5%, plus there is an additional tax of 2% CST on inter-state sales). Post GST Rate applicable will be 28%  

For those of you who have not-so-good habits, they’re going to cost you, literally. This is to compensate for any loss of revenue to the government.

If you are a regular user of Pan Masala, be ready to shell out 60% as GST and GST on Tobacco products ranges from 71% to 200%!

While the rate on alcohol for personal consumption is also likely to rise.

2.  Are cars likely to become cheaper? Yes, they are!

• Taxation on most categories of cars will go down post GST
• If you have been eyeing a BMW, you will benefit the most, as the premium car segment buyers will enjoy the maximum reduction in tax. Current tax rate of 48.5% to be replaced with GST of 28% plus cess of 15% = 43%
• Prices of small cars will remain more or less the same with a minor change in tax rate. The current tax rate of 30% will be replaced with 28% plus a cess of 1% to 3% = 29% to 31%
• Two wheelers on the other hand will cost more as there is a new cess that is going to be added to the taxes. The current tax rate of 29% to be replaced with 28% GST plus 3% cess = 31%

3. Real estate prices could see a marginal decrease

Before GST the taxation rate on purchase of under construction property was about 9% to 12%, after GST this has been set at 12%

• Although prices here are not expected to see that much of a difference, it will surely bring some transparency in the system along with RERA (read our article on RERA)
• GST will have a cascading effect. For instance, it will take away all the additional taxes like vat, service tax, excise duty, entry tax, LBT (Octroi Duty in Mumbai), which will help reduce administrative costs 
• With input tax credit available to developers, it will reduce tax liability on projects
• All these benefits will likely be passed on to you as a consumer
• Don’t forget though, like earlier, under the GST regime, Stamp Duty is over and above this 

Disclaimer: The views and opinions expressed in this article are for informational purposes only. The authors and publishers are not responsible or liable in any manner for any actions you might take relying on the contents of this article.


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