By Yeldi on June 8, 2017
How does the GST tax affect you and me?
We have all been hearing about the GST tax in the news, in the papers, from your colleagues and even at the roadside tea stalls. So what is GST and how does it affect you and me?
GST is Goods and Services Tax. India is undergoing a massive reformation in its indirect tax structure. It is said that this is a first of a kind in the world where a country so massive and with the 2nd largest population in the world has attempted to bring together so many taxes. The purpose of this bill is to levy a single tax on supply of goods and services from the manufacturing stage until it’s delivery to the consumer. The consumer will only have to pay the GST charged by the final dealer and do away with all the interim taxes like VAT, excise duties, service tax etc. These taxes will be woven into the GST tax. So basically GST will streamline the tax process by replacing the indirect tax levied by the Central and State Government. It also aims at bringing the black money into mainstream economy.
There will be 3 types of GST:
- CGST- Collected by Centre
- SGST- Collected by State
- IGST- Applicable on inter-state sales. This will help in smooth transfer between States and the Centre.
The GST will replace the following indirect taxes:
- Central Excise Duty
- Service Tax
- Countervailing Duty
- Special Countervailing Duty
- Value Added Tax (VAT)
- Central Sales Tax (CST)
- Entertainment Tax
- Entry Tax
- Purchase Tax
- Luxury Tax
- Advertisement taxes
- Taxes applicable on lotteries
The GST will also include the following taxes:
- The Education Cess
- The Swachh Bharat Cess
- The Krishi Kalyan Cess
- However, the Clean Environment Cess will be retained.
If you aren’t a merchant or a retailer, you could wonder how all this could affect you? Well, just 2 words – Household Budget! GST Council has declared tax slabs and cesses on 1,211 items. The council has set 4 tax brackets - 5%, 12%, 18% and 28% for services & products.
Experts say that the following items could see a spike in rates:
Mobile phones, Tobacco & Cigarettes, Textile, Branded Jewellery, Luxury Cars etc.
And these could become cheaper:
Sugar, edible oil, tea, coffee (except instant coffee), hair oil, toothpaste, soaps, LED TV’s, LED lighting, entertainment, eating out, air coolers, water heaters, paint, cement etc. Ayurvedic and homoeopathy medicines, agarbatti, umbrellas, electric vehicles will be taxed at 12 percent.
It’s widely assumed that the GST rollout will start only after 1st July 2017 and until then plenty companies are announcing massive discounts on their present stock of items which they need to clear out before the new taxes are applied. However, all is not lost for the common man. He needn’t be dependent on the government to reduce prices, for him to comfortably manage his monthly budget. There are pioneering products like Yeldi Folks NFC tap and pay cards that help us along the way. A digital wallet started in Chennai assures up to 35% Recash and coupons all year round by tying up with the local merchants.
So, while the Government of India works in our interest, we too need to be informed and perceptive about our personal finances and save as much as possible.
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