Since its introduction, GST has brought in a variety of opinions, right from the economists and political leaders to pundits and even the common man. It has been a good five months since GST came into effect, and we even had quite a few months prior for preparation. However, the general public still does not understand GST and its tax implications across various industry sectors correctly.
This blog is conceptualized as a short guide for beginners, covering the major pain points people have, the challenges and benefits they might face, and how far will the GST impact be felt.
What is GST?
GST or Goods & Services Tax has been called one of the biggest tax reforms of the country. It has replaced all other applicable taxes, for eg., service tax, VAT, excise tax and so on, with a singular tax rate that only varies according to the industry.
Who is required to pay GST?
GST is to be paid to the government by manufacturers, sellers and service providers. It is not something that directly affects the end consumer, though it will end up getting added to the bill just as it happens currently.
GST Payment Guide
Do the GST rates vary?
The latest update back in November 2017 has pegged the GST rates at 5%, 12%, 18% and 28%.
- GST @ 0%: Education & Healthcare Sectors, Milk, Salt, Fresh Vegetables, Unbranded Honey & Paneer, Jaggery
- GST @ 5%: Kerosene, Domestic LPG, Coal, Tea, Edible Vegetable Oil
- GST @ 12%: Non-AC Restaurants, Butter, Ghee, Mobiles, Almonds, Jams & Jellies
- GST @ 18%: Restaurants serving alcohol, Capital Goods, Industrial Intermediate Items, Computers
- GST @ 28%: Small cars, High-end motorcycles, Consumer durables, Luxury items
How is GST going to be implemented?
A Dual GST model is currently being implemented in India. Equal percentages are collected by both, the State as well as the Center. Your usual restaurant bill would look as follows:
Amount: 1000/- INR
SGST: 9%
CGST: 9%
Net Total: 1180/- INR
There is also one more kind of GST that would only be applicable for Inter-state sales, called the IGST.
How will GST majorly impact you?
The common man would mostly end up benefitting from the new GST rates in place. The benefits would be most felt in segments such as Real Estate, Cabs, Low-tier Hotel Stays, Air Travel and Household Expenses. A small blow might be felt in other segments such as Luxury Goods & Holidays, Tobacco, Drinks and similar.
Change has never been an easy pill to take, especially in an economy as large and widespread as India. There already are anti-profiteering mechanisms built-in in the new GST regime, however it will definitely take some time for businesses to adjust the price hikes and control the economy from blowing up. Meanwhile, the law promises to bring much-needed transparency to taxation by leveling the state and center taxes, as well as by eradicating all of the other middle-level taxes which could be exploited.
The system is changing from a production-based to a consumption-based economy post introduction of GST. The long terms benefits include price falls, easy accessibility, growth of infrastructure and economy on large-scale levels, and much more!
Do let us know your viewpoints in the comments below on how GST is impacting you as a businessperson or a consumer over the past few months, and how you envision the new taxation laws to support Indian economy in the future.
