Goods and Services tax bill was passed last year by the parliament and major bills related to GST were passed by the parliament this March. It is believed that the GST will come into effect from July 01, 2017. Unlike the current tax system, GST will have different tax structure and there will be only one form of tax i.e. GST. Most intellectuals in business field are appreciating GST but from the eyes of a commoner, it is important to understand that what change GST will bring to them.
GST Effect on the Citizens of India
Most Indians evaluate any reform or initiative on the basis of impact the respective initiative causes. Therefore it is important to analyze GST from the perspective of a common citizen.
Firstly, GST will remove the complex tax system by scarping numerous types of taxes like VAT, service tax, custom, excise, revenue tax and many more. This will make it easier to do business in India. At present, a person usually pays 30-34% of tax on a particular good and 15% service tax on taxable services but after the implementation of GST, the rate will be around 6-26% depending on the good you buy and 18% for services you receive.
The government has fixed four types of tax slab depending on the commodities. Essential goods have less taxation while tobacco products have the highest taxation. Common commodities like ration, medicines, and electronics will have lower tax slab while cosmetics, polluting products and tobacco products will have higher tax slab.
What will be Cheaper and Costlier?
To pursue the agenda of digital India, the government has made electronic goods cheaper or the tax rate will be lesser on these products. Some include: Automobiles, fan, paint, cement, and ration will get cheaper while edible oil, phone calls, tobacco products, services and jewelry products will get costlier.
GST will boost the Indian economy and will add 2 points to the present GDP. Simple tax system will attract investment and will boost agricultural and manufacturing sectors. The flexible tax slab can cost FMCG companies while electronic companies will have better times.