GST or Goods and Services Tax is basically an introduction to a new taxation system that shall unify the whole of Indian market with respect to a fixed taxation scheme. Many experts have their opinions regarding whether it is beneficial or not but since it is going to be implemented soon in the future, it is now important to understand the probable impact of the same in your life.
Resistance and change
Change in any system has some or the other resistance as people are not always ready to accept change. However, after the initial resistance, everything becomes normal once a newly introduced scheme settles down. In very rare instances, will you see a roll-back of a scheme of such intensity due to resistance. The same was the case with demonetization, there was an initial resistance but everything seems normal now. To sum up, GST implementation will have some resistance as seen already with strikes from traders, hike in prices especially food items, etc.
Impacts currently seen
Currently, there are several rumors running around the market about GST. When the final announcement is made, the rumors shall be rubbished or be correctly explained to understand the pro and cons of the same. The Pre-GST sales, advertisements of accounting software, a lot more GST based software coming in the market for traders, etc., are some of the effects of GST that have already been visualized recently.
Carrying inventory shall be a tedious task for traders and most of them would like to avoid the same. Hence, this is an opportunity to grab some exciting discounts and deals on products you had been craving to buy. Just re-structure your shopping list and get some cool deals on your necessary products before GST.
What could get dearer?
In the list of items that could get dearer, there is a separate list on display by different sources. However, the tax slab or rate and those items are mere expectations and true blueprint shall be displayed only on 30th June 2017. However, based on some reliable sources and consistent updates, the below list of items might get slightly costlier or dearer-
Having food at restaurants especially air-conditioned restaurants
Readymade clothing & footwear
Banking services and Insurance
Transportation like metro travel, air travel, cabs, etc., to get costlier
Soft drinks or drinks with excess sugar, alcohol and cigarettes
Tea, coffee, etc., would be slightly dearer from July 1st, 2017
Education costs and Healthcare
Housing, real estate, construction, labor, etc.
What could get cheaper?
Hotels, lodges at tourist locations priced below Rs 1,000 per day shall be exempt from GST
Essentials like food grains, egg, milk, salt, newspapers, books etc., are also not attracting any GST
Movie tickets and entertainment services
Entry segment vehicles including 2 wheelers and cars could get cheaper
Cement, electric supplies, paint, etc., used in construction could get cheaper to give a boost to the realty sector.
The GST rate card
The Government and GST council must be optimistic about the move as they were about demonetization. Their optimism can push the market by creating a hope for growth and prosperity soon. However, the report card seems to be more beneficial for the Government than to the public. According to a GST report card, 62% of the categorized goods fall in the bracket of 18% or the 28% slab which happens to be the highest tax brackets. While only 21% of these items fall under the category of 5% or completely exempt. 17% of the goods and services remain in the mid-slab of 12%.
This can get too technical but the summary is that traders and business people shall compensate any costs by levying it indirectly on the consumers. The need for an accountant to file GST, need for extra time to manage GST regulations, etc., can only add costs for the retailers. This will indirectly on short-run as well as long-run impact the consumers.