Simplicity over complexity’, seemed to be the motto of Hon’ble Union Finance Minister Arun Jaitley, while introducing the much in debate GST bill. And it is for the common man of India. The bill called a game changer in every respect is supposed to roll out major changes for the country.
It is basically a way to unify the numerous taxes applied to the manufacture of goods and services, starting right from the production process, up till the product reaches the consumer. But, the question still in every common man mind is, how is the GST in real terms going to affect the everyday life of the common man in India?
To answer the same, the following points have been discussed to give you an insight to a roughly fair idea of the ways GST is going to you:
1) More disposable income:
The main aim of the GST is to eliminate the useless taxes and rates applied on goods and services in a haphazard way which ends up going to not many beneficial places. All the different taxes like VAT, service tax, excise etc. applied your everyday purchases of goods, meals in restaurants will be applied under one head, that is, GST. This will provide you with more disposable income since you’ll have to pay less in taxes.
2) More funds for the centre and the state:
Since tax will now directly go to the centre and the state, they will collect more funds which will be utilised in improving the infrastructure and the people of the country. The government can then work on better schemes for the people in need, farmers, better welfare policies, better public places, strengthening security etc.
3) Services will get more expensive:
The current rate of taxation on services is around 15%, but after GST the tax on services will be put to a minimum of 18%. Taxation on services comes under GST charged by the states, thus, they may have an incentive to increase the rate of tax on services. All of this implies that enjoying services like eating out, talking on a cell-phone etc will all become more expensive. Even buying products online will become more expensive as the e-commerce industry is going to come under the tax slab.
4) Cheaper Goods:
A number of selected goods will become cheaper with the GST rolling out. The current tax rate on goods is 25%-30%. This rate will reduce from 12.5% to 12% in case of readymade garments, from around 19% to 18% in case of cars and from 24% to 18% in case of led tv etc.
These are a few ways the new tax act will impact your budget! These points are subject to consideration since the final rate has not yet been decided. It will also take a few years for the complete rollout of the GST.