GST roll out: 10 goods and services that will become more expensive after July 1
It is expected that the Indian economy will see an inflationary effect immediately after the implementation of the GST.
Mumbai, May 6:With the Parliament clearing the way for four crucialGSTbills in its April session, India’s landmark tax reform is all set for its rollout on July 1. While many hurdles with respect to implementation, still exist, a smooth rollout could see a huge change in the pricing of various goods and services across the country.
TheGSTis expected to provide a much-required framework for solid economic growth. The proposed sales tax under the GST will also serve to reduce the current costs of production and boost the manufacturing sector. TheGSTcouncil is yet to determine the rules regarding tax refund, registration, invoice debit and credit, the framework on input-tax credit, valuation.
Further, the council will set the norms for transitional provisions and composition at its next meeting on May 18. However, the council has made it clear that theGSTwill have rates that are split into four categories of 5, 12, 18 and 28 per cents and fitment for all the goods and services will be done taking into account the current levels of state and central levies exercised on them.
While it is expected that most goods may become cheaperafter the implementation of the Goods and Services Tax, quite a few services and some goods will become more expensive after the tax comes into effect. It is also expected that the Indian economy will see an inflationary effect immediately after the implementation of the GST.
Here are top 10 goods & services that will be expensive after GST:
Telecom services:Cellular connections and mobile data are expected to become pricey after July 1. These will also be complemented by a hike in the charges of Wi-fi connections and DTH services.
Insurance: If you’re looking to take out a life insurance or any other insurance, the right time might be before July 1. TheGSTis also expected to hike the cost of renewal premiums.
Banking: Banking and other related services are expected to eat more into the common man’s pocket. This may also apply for investment portfolio management services.
Transportation: Ticket prices for public transportation, especially in metro cities will cost more. This may have a higher impact on passengers commuting by metro or monorail systems. The cost of private transport and air travel is also expected to rise.
Soft Drinks:In a bid to discourage the rampant growth of soft drinks, the government has proposed a higher taxation on Coke, Pepsi, Fanta and all other aerated drinks.
Cigarettes:Falling under the category of ‘sin goods’, cigarettes will attract a higher rate of taxation raising their net costs after the implementation of theGST.
Alcohol: Just like cigarettes, alcoholic beverages also fall under the category of ‘sin goods’. The government aims to deter their consumption in states where they are not banned, by levying an additional amount of tax.
Health Care: Moving away from the traditional socialistic policies, the government aims to cut down on certain long-existing subsidies. Health care will be one of the sectors affected by this policy.
Education:Education will also see a few cuts in subsidies, like health care. this means that school tuition fees, both for public and private schools, could increase.
Housing:GSTis expected to have an inflationary effect on house rents across the country. However, with other acts like RERA being implemented, the cost of purchase is expected to suffer only a marginal impact.
Services seem to have a larger impact because of theGST, as they attract a higher tax rate of 18 percent under it. In comparison, the current system attracts only 15 percent tax on services. The inflationary impact of the Goods and Services tax is expected to be offset in the long run, as it gets regularised into the economy.