Impact Of GST On Your Household Budget
The tax system in India has seen an overhaul with the launch of Goods and Services Tax (GST) from July 1. The GST, in its making, was met with both inhibitions and excitement. While the country is still debating the impact of the four-structure tax system, some of its benefits have already started to trickle down to the masses.
India now has four tax slabs – 5%, 12%, 18% and 28% and an exempt and additional cesses category. Though GST will impact the budget of everyone differently, depending on their lifestyle patterns, the change in household expense is set to be more or less the same for everyone.
Some household articles have seen a price increase, while the prices of many others have come down. Food products have seen a GST imposition of 0-5%, while toiletries have seen an imposition of 18%. Let us take a look at the overall impact of GST on your basic household expenditure:
Groceries –While some grocery items like milk, bread, pulses, flour, fruits and vegetables, tea, coffee and basmati rice have been left outside the ambit of GST, other items like packaged curd, paneer, cheese, biscuits, corn flakes, shampoos, face creams, hair oils, medicines, etc. have become cheaper. Things which have become expensive include packaged chicken, butter, bhujia, etc.
Lifestyle expenses – Entertainment expenses have come down as the tax has been reduced to 28% from 30% earlier.
Airfares – The economy class airfare too has come down as the new tax regime levies 5% tax on airfare against the old rate of 9%.
Cab rides – Your monthly expense on travel is sure to come down if you take cabs for regular commute as the service tax has now been reduced to 5% from 6%.
Telecommunication services – DTH and cable TV charges have become dearer as these services will charge 18 per cent GST instead of 15% service tax.
Education – Pre-schools and school education will remain tax free under GST. Services offered by colleges and higher universities will attract 18% GST levy as compared to 15 % earlier.
Luxury spending – Stay in 5-star hotels, restaurant bills etc have gone up with the implementation of GST. Luxury expenses are now taxed at 28%.
Car prices – Many companies have revised the prices of their car models after the GST roll out. Now car purchases are taxed at 28 per cent GST with an additional cess between 1% and 15%. Cars with diesel engines less than 1,500 cc will attract 3 per cent cess, while small cars with petrol engines less than 1200 cc will be imposed with 1% cess. Big cars with engines over 1,500 cc and SUVs with length over 4 metres will be imposed with 15% cess in addition to 28% GST. Electric vehicles have been kept at 12%.
GST has certainly brought in changes in prices of various items, but what you need to do is plan your household budget smartly to avoid getting into any financial mess.