The Goods and Service Tax Bill passed by the Lok Sabha will be applicable to manufacturers, sellers and service providers. It will replace VAT, excise duty, and service tax. GST which aims to remove the cascading effect of indirect taxes also has a significant impact on the consumer’s daily needs.
Let us have a look at a few of them:
1) Movie tickets
The current entertainment tax range is between 35 and 55 percent. Going forward the GST rate on cinema tickets will be 28 percent. This is good news for the movie buffs as the cinema tickets are likely to get cheaper. However, the states still have the power to levy additional taxes.
The goods which are available for mass consumption such as toothpaste and soap fall under the 18% tax bracket in GST scheme which is lesser than the 22-24% they have been paying. The FMCG companies, whose tax incidence has come down under the GST regime, are likely to pass it on to the consumers in the form of lower prices.
The luxury car now seems within the reach of a common man. It falls under the 28% slab rate. An additional 15% cess will also be levied. So the maximum tax rate will be upto 43% which is less than the current cumulative tax rate which ranges between 52 – 55%.
In a bid to encourage electric cars, they are under the lowest slab rate of 12%. Negative Impact:
1) Eating Out
It seems as though the Government is not a fan of outside food. Under the GST system, the restaurants are divided into two categories, non-AC and AC restaurants. In both cases, there is quite a hike in the rates. Dining out in AC restaurants will attract tax of 18 per cent as against 10.6 per cent charged (including VAT and service tax) currently. For low-cost restaurants, the tax rate would be 12% as against 6 % prevalent currently.
2) Phone Bills
The tax rate applicable to telecom operators under the GST regime is 18% while the present rate is 15%. Telecom companies have warned of a 2-3 % increase in phone bills even as the finance ministry has asked them to re-work costs to pass on input tax credit benefits to the consumers.
3) Online Shopping
Your favourite e-commerce companies may stop giving discounts and freebies without much notice, so don’t hate on them. The e-commerce companies have to pay tax on the original amount paid to the supplier.
4) Air tickets
Under the new regime, the GST Council has lowered the tax rate for economy class flight tickets to 5%. Originally it was 5.6 % under the VAT scheme. However, the business class tickets will attract a higher tax at 12% after GST implementation as against 8.4 % under the VAT scheme. So basically the high end consumers will suffer. But on the brighter side, the implementation of GST is bound to make compliance easier and turn India into a single market where goods can move freely across state borders