GST Roll Out Launch: What becomes ‘cheaper’ and what becomes ‘costlier’ from July !

GST Roll Out Launch: What becomes ‘cheaper’ and what becomes ‘costlier’ from July 1

The Union Government have exempted most of the food items from tax under the GST, while others fall in lower tax category of 5 per cent or 12 per cent.

New Delhi, June 30: The GST Council will meet today on Friday at 7 pm at Vigyan Bhawan in central Delhi ahead of the midnight launch of India’s most ambitious tax reforms after independence. While the Indian market has been eagerly waiting for ‘One Nation, One Tax’ under the new Goods and Services Tax (GST) regime, consumers have only one thing in their mind – what will get cheaper and what will cost more after July 1.

The warning by the Union Government to pass on the benefits from lower tax rate to consumers has also come as a good news for consumers. The Union Government has bracketed all the GST in the country in five categories – 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent. While some of these products have higher effective tax rates before the GST and some reports suggest that the new tax regime will reduce the burden on buyers, some of the items will now be taxed at higher rate. Here are some lists of items that get’s cheaper and expensive under the GST. 

What gets cheaper under the GST:

Food related products:

The Union Government have exempted most of the food items from tax under the GST, while others fall in lower tax category of 5 per cent or 12 per cent. Under the new GST rules unpacked foodgrains, unbranded atta, besan, maida, fresh vegetables, salt and fruits will get cheaper as these items have been exempted from tax under the new tax reforms. Apart from the above-mentioned items, processed food items which fall under 5 per cent tax will also get cheaper.

Footwear/Apparel:

Footwear and clothing have been put under different tax slabs ranging from 0 to 18 per cent. But most of them will get cheaper under the new tax scheme.

Personal care products:

Products like hair oil, toothpaste, soaps will become cheaper at 18 per cent tax rates. These items are currently taxed at 24-28 per cent.

Travel tickets:

Travel tickets for economy class in airways are expected to go down after implementaton of the GST. These tickets have been placed in the 5 per cent tax bracket under the GST.

Entertainment and movie tickets:

Movie tickets under Rs 100 will get cheaper in most states with new rate of 18 per cent GST. Most states charged 25-30 per cent tax on movie tickets.

Hotels:

Non-luxury hotels and hotels with tarrifs of less than Rs 7,500 are expected to get cheaper under the new tax reforms.

Automobiles:

A two-wheeler with an engine size of 350 cc, three-wheelers, SUVs will get cheaper under the new tax reforms. The tax rate on these vehicles may vary from segment to segment.

Restaurants:

Having dinner or lunch at a small restaurants will also cost less after the implemetation of GST. Small restaurants have been placed under the 5 per cent tax bracket under the new GST rates.

Household items:

Kitchen items like utensils and pressure cookers, pans will get cheaper as they will be taxed at 12 per cent GST rate, much less than the current 19.5 per cent rate.

What will become costlier under the GST:

Food items:

Branded coffee, tea and spices will be taxed at 5 per cent. Currently these items are taxed at the rate of 3-4 per cent.

Personal care:

Products like deodrants and shampoos will become more expensive after implemetation of GST.

Building construction:

Cements, steel and other raw material used in building construction will become costlier under the GST.

Household items:

All home appliances like television, refrigerator, air-conditioner and washing machine will attract a 28 per cent tax rate, higher than the existing rate of 23-28 per cent (depending on the state where tax payers live).

Tax on Sin Items:

Tobacco products, aerated drinks and other luxury goods have been kept in the tax slab of 28 per cent under the new GST and will get costlier. Coca Cola and other aerated drinks has already announced that they will increase prices of Coke.

Services:

Insurance premiums, mobile charges, courier services, banking charges, broadband services will also get costlier as the current service tax of 15 per cent will be replaced with 18 per cent GST.

Travel:

Air tickets for business class and first class train tickets will cost more. This has been placed under the 12 per cent taxbracket.

Automobiles:

Two-wheelers with an engine capacity of more than 350 cc and three-wheelers will become costlier with the implementation of the GST.

Restaurants:

Restaurants inside five-star hotels and fine-dine restaurants will cost more.

Movie tickets:

Cinema ticket above Rs 100 will cost more with 28 per cent GST. However, the impact will be different from state to state depending upon the existing rates of entertainment tax.

Restaurants and hotels:

Hotels that have air condition and serve liquor will come under 18 per cent GST. Hotels with room tarrifs between Rs 2,500 and Rs 7,500 will also fall under 18 per cent GST. Hotels with room tarrifs above Rs 7,500 and 5-star hotels will come under 28 per cent GST, making the stay costlier.