Here’s How the GST Bill Will Affect YOU, the Consumer

Here’s a look at the benefits in the offing for the consumer with implementation of the GST.

GST bill brings some happy and some not-so-happy news. (Photo: iStockphoto)

This week’s big news took shape in the form of the goods and services tax (GST) bill, which finally got the go ahead in the Rajya Sabha. In plain and simple terms, GST will be absorbing all the existing forms of taxes that consumers have to pay into one unified tax.

This is seen as a positive move by experts across the industry, but what does it really mean for people, especially when it comes to buying phones, car or even new air-conditioner/television? Here’s a quick look at it.

Higher Mobile Bills

We start off with the bad news. In all probability, users will have to pay more for their mobile bills once the GST is rolled out.

Time for the likes of Airtel, Vodafone to mint more money. (Photo: Reuters)

A supposed 18 percent GST rate could end up increasing your mobile bills. Currently, the tax rate on telecom operators is fixed at 15 percent. 

The likes of Vodafone, Airtel, Idea and others stand to benefit hugely with this GST rollout, but in the end, consumers pay the price for it. It remains to be seen if the entry of Reliance Jio 4G has a side effect on the sector; that will surely be good news for the end consumer.

Pay Less for TVs, Air Conditioners

Cost of television and other white goods will come down. (Photo: The Quint)

The price of consumer durables like air conditioners, refrigerators will see a fall which is a direct impact of the inclusion of the GST bill. The initial impact of the bill will be seen on the logistic and supply chain inventory side.

The industry is yet to figure out the actual benefit which can be passed on to the consumer, but any fall in price is always good for the buyer.

‘Make in India’ Comes to the Fore

The biggest benefactor of the GST bill will be Prime Minister Narendra Modi’s ‘Make in India’ initiative. This bill will offer various benefits to companies manufacturing locally, and encourage more companies to do so.

The Galaxy S6 Edge smartphone at the Samsung Galaxy Unpacked event before the Mobile World Congress in Barcelona, March 1 2015. (Photo: Reuters)

Being a manufacturing entity, Intex Technologies stands to benefit from a uniform tax regime because this will boost operational efficiencies, increase cost savings and make products more competitive. 

Narendra Bansal, Chairman & Managing Director of Intex Technologies (India) Ltd.

PM Narendra Modi attending a ‘Make in India’ meeting. (Photo: Reuters)

Having said that, most mobile brands have refrained from commenting on the effect of the GST on their existing tax channels. The likes of Micromax also feel that it is too early to discuss the real impact on the mobile ecosystem but they are quietly confident that the tax structure will become more transparent and less complex going forward.

The calculation of pricing will remain speculative till the final GST rate on each product category is known. However, with GST, the overall taxes on goods are likely to come down and make them cheaper.

Cheaper Cars in the Offing

And yes, the rollout of GST will also come with the prospect of buying two-wheelers and four-wheelers on the cheap.

Industry experts foresee a 10-17 percent fall in prices.

Maruti Vitara Brezza. (Photo: The Quint)

GST is expected to drive overall consumer demand since the cost for the logistics and supply chain inventory will be curtailed by almost 30-40 per cent, the benefits of which are expected to be passed on to the consumers

Sumit Sawhney, Country CEO and Managing Director, Renault India