Prices after GST: Here's what may get cheaper and costlier from July 1

Prices after GST: Here's what may get cheaper and costlier from July 1

Here is how the prices of Goods and services is likely to change after GST comes into effect from July 1

GST or Goods and Services Tax will come into effect from July 1. Touted to be India’s biggest tax reform since independence, GST will replace a string of central and local levies such as excise, value added tax, octroi, service tax. Aimed to broaden the tax base and bring down the overall tax rate, the new regime will subsume all other indirect taxes on supply of Goods and services, right from manufacturer to consumer. The introduction of GST will not only have an impact on businesses in India but also on the common man’s monthly budget.The GST rate for both goods and services has been divided into four slabs – 5 percent, 12 percent, 14 percent and 28 percent. There are various items which have been exempted from the tax base completely.

Here we have broadly divided commodities and services in three categories on the basis of the expected change in their prices.

Services and items that may get costlier:

a) Service charges: With most of the services put under the 18% slab, School fees, courier services, Mobile bills, insurance premiums, banking charges, Wi-Fi, direct-to-home services is likely to get costlier.

b) Small cars: small cars may get slightly costlier as they will now fall under the 28 percent tax bracket. They are currently taxed between 25 to 27%.

c) Personal care items: Cosmetics such as shampoos, perfumes and make up items will be under the 28% slab, up from the current 22.

d) Gold: The precious yellow metal may get costlier as GST has finalised 3% tax rate against the present rate of 2 per cent.

e) Home appliances: If you are planning to buy TV, ACs or washing machine, you may have to shell out a few extra bucks as reports suggest that their prices may increase.

f) Tea, coffee, spices: Under the new tax regime these items will be charged at 5%. At present they are taxed at 3-4%.

g) Gambling/Casinos: Those fond of gambling will have to pay higher tax of 28%.

h) Tobacco products : Cigarettes, pan masala, gutkha are set to get more expensive. Scented Zarda and filter Khaini will attract 160 per cent cess, for pan masala gutkha it would be 204 per cent. The cess would be levied over and above the peak GST rate of 28 per cent.

i) Air tickets: Business class is going to cost more under the GST.

Services and products that may get cheaper

a) Smartphone: Well, the smartphone revolution is likely to continue as the prices of smartphone is likely to come down. The tax on smartphones will come down from 13.5 % to 12%

b) Movies: Taxation on movies, entertainment, cable, DTH is likely to come down as ‘entertainment tax’ levied by states has been subsumed in the GST which has been fixed at 18%.

c) Transport: There is going to be a slight drop in transport charges as cab rides will attract a 5% tax against the current 6% from July 1.

d) Branded goods: Under GST, branded goods will be taxed at 18 percent. Currently, these goods are taxed around 23-24 percent.

e) Hotels: Here is some good news for travelers as tax on hotels has been at 18 percent which is likely to bring down the prices. Only high-end hotels with Rs 5,000 plus tariff will attract 28 percent.

f) Restaurants: Restaurants too will have 18 percent tax, a drop from almost 22 percent. The replacement of service tax and VAT with GST at the above rates would make it simple for the customer to understand how their bill have processed.

g) Auto: Two-wheelers, large cars, white goods and SUVs are all expected to become cheaper.

Exempted items:

Daily items like milk, cereals, meat and curd have been exempted from the GST. Services like religious travels, Haj yatra, metro travel, education and healthcare will not be taxed. Primary education and primary healthcare is exempt from GST. This would mean that while there is no tax to be paid on the amounts spent on these by the consumer.

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