While the full impact of GST is still yet to be understood, some of its consequences are clearly visible in our daily lives. From paying bills in a restaurant to shopping online, GST has brought about a sea change in the financial system.
When GST was introduced, many businesses were negatively affected due to the unfamiliarity with the new taxation system. However, in time, businesses have begun to understand its nuances and are adopting strategies to make the most of it. Several changes have been made to the GST bill since its implementation, and more will be made in the future to facilitate ease in taxation. Let’s look at the impact of GST, both positive and negative.
- For those looking to start a business, GST will be an advantage. It being a one tax system for all states of India, you would not need to pay various taxes in different states, and would be free of certain duties on your businesses
- Before the GST was implemented, there were a number of indirect taxes levied on various goods and services, including Value Added Tax (VAT), Swachh Bharat Cess, Krishi Kalyan Cess, Service Tax, Central Excise Tax, etc. Now, the government has replaced all these with Central GST and State GST
- With the implementation of GST, India is now a unified market, proving an attractive proposition for foreign investment
- The proposed GST rates are higher on certain goods, than the previous VAT rates, leading to an increased cost on these goods
- GST is divided into two categories, controlled by the state and central governments
- Certain sectors enjoyed an excise duty fee and no tax additions before GST. Such sectors may now face losses as GST gets added
Additional Read: GST’s Impact on Gold
Following are the changes recently made in GST bill
- Rates for 17 consumer goods including washing machines, refrigerators, TVs, etc. slashed from 28% to 18%
- Sanitary napkins, rakhis, deities made of stone, marble and wood exempted under GST
- Footwear under Rs. 1,000 now under 5% slab
- Bills of hotel stays above Rs. 7,500 will attract 28% GST. Bills below Rs. 7,500 will be at 18% GST
- Fortified milk will be exempted from GST
- Rates on paints, wall putty, and varnish down to 18% from 28%
- Perfumes, toilet spray now under 18% slab
- GST on handbags, jewellery box, wooden box for paintings, art pieces of glass and stone, ornamental framed mirrors, handmade lamps etc., reduced to 12%
Buying a property and a car are now cheaper
With a GST rate of 18% but the effective rate being 12% (owing to the input tax credits the builder can avail) under construction properties will now be cheaper than read-to-move-in properties.
So now is the right time for you to be investing in a new property. Bajaj Finserv offers a suite of financial products like home loans, loans against property, loans against shares and more at low interest rates along with a hassle-free loan application experience. Get money in bank with 1-step verification, with pre-approved offers. Your loan amounts, card limits and insurance is already approved. Check your pre-approved offer.
The implementation of GST has benefitted some industries while increasing the tax liability of others. Service tax isn’t levied on loans, making them a good tax-free source of cash during emergencies.
Additional Read: Impact of GST on SMEs
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