It is finally Happy Birthday GST— India has created history! So how does India’s biggest tax reform in decades affect you? Do you have reason to smile? Is life going to burn a smaller hole in your pocket?
Here’s what you need to know.
The implementation of GST is likely to reduce taxes on manufactured goods but increase taxes on services. We pay anything between 20-30% tax on manufacturing goods; that will come down to 18%, assuming 18% is the set GST rate. But service tax which is 14% will go up to 18%, hence services will cost more.
Lets get down to the specifics:
Made in India Maruti, Hero, Mahindra and Bajaj are likely to become cheaper. But your SUV, life and health insurance will cost more.
Watches, Appliances and Phones will cost less. But your phone bills will go up. Essential services like banking, telecom and IT will also cost more. Credit card bills will go up as well!
Movie tickets will become cheaper, but eating out and cultural programs will become more expensive. Alcohol and tobacco is also slated to become more expensive. Textile and jewellery will also cost more.
Travelling costs will go up! Rail and air travel will burn the biggest hole in your pocket. Cost of rail and air tickets will go up by 1-2%.
Logistics costs will come down so cement will become cheaper — so it is good news for pan-India players like Ambuja, UltraTech and ACC. While Indian developers are optimistic, the impact on real estate will really depend on the final GST rate.
The math is simple, GST will cause inflation initially, but the extent of it will depend upon the GST rates that Centre and States agree upon. The GDP impact will kick in 12-18 months after GST goes live. GST is expected to usher in the much awaited acche din, but we’ll know only in 2018-19.
Video Editor: Sunil Goswami
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