The Goods and Services Tax (GST) is finally here, and will be implemented on July 1st, 2017. This will replace several taxes across states in India, including the Value Added Tax (VAT), excise duty, customs duty and other state taxes.
The Government started announcing GST rates from May 2017 for various items. Some of them might become more expensive under GST, while others may be available at cheaper prices.
Additional Reading: A Quick Guide To GST Rates
Here’s a list of things that GST will have an impact on.
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Smartphones – Mobile phones will be taxed at the rate of 12%. This will result in the cost of mobiles going up by 2% to 4%. Also, it is expected that the government might impose 10% customs duty on imported mobile phones.
So, if you are going to buy a phone after GST is rolled out, look at retailers who might offer good discounts or use a Cashback Credit Card to save some money.
Additional Reading: The 5 Best Smartphones Under Rs. 20,000
Gold – The GST rate for gold is set at 3%. The total tax will be 13%, which includes an import duty of 10%. The earlier rate was 12%, which included 10% import duty, 1% tax and 1% VAT. Also, there will be a 5% tax on services that jewellers offer outside factory premises.
This could make diamond jewellery more expensive. According to a report by the World Gold Council, “the simplified taxation structure will make the gold supply chain more transparent and efficient. It should also boost India’s economy, which in turn will support gold demand. The key points include:
- At 3%, the GST rate announced on June 3rd, 2017, was lower than the industry had feared. Industry reaction has been positive.
- There are two important GST rates, which will affect the gold industry: the 3% tax on gold products – which replaces the excise duty and VAT components, but sits on top of the import duty – and an 18% tax on services, which will affect small-scale artisans who design and manufacture jewellery for larger manufacturers.
- While the overall tax rate that consumers face is likely to increase slightly, GST will bring benefits too. Firms will be able to offset the GST they pay against their revenues, and double taxation throughout the supply chain will be eliminated. Supply chains will become more efficient.”
Be sure to check gold rates before you make your purchases.
Additional Reading: Is Now The Right Time To Be Buying Physical Gold And Silver?
Cars – All cars will be taxed at the rate of 28% under GST. However, a cess of 3% to 15% can be levied on this rate, depending on the classification of the car (that is, whether it is a small car, luxury car or SUV).
Also, the tax for used cars and new cars are the same. This means that buying a second car will become more expensive under GST. If you are strapped for cash, you could consider a Car Loan.
Additional Reading: The Future Of Car Loans In India
Online Shopping – Do you know e-commerce companies usually do not collect any tax? However, under GST, they will be collecting tax at the rate of 1% for the payments made to sellers on their portals. Also, freebies and discounts will attract additional tax under GST.
Another point is that e-commerce firms will have to bear the taxes in case of returns and refunds and get it refunded later from the government. So, the cost of online shopping is likely to go up under GST. However, you can use a Shopping Credit Card to save big.
Additional Reading: How To Get Over Your Shopping Addiction
Consumer Durables – As you may already know, retailers were offering huge discounts on consumer products such as air-conditioners and televisions, since they wanted to get rid of stock before GST is implemented. Under GST, the tax rate for these goods will go up by 5%. It might be best to save up using a Fixed Deposit.
Additional Reading: Shopping With A Credit Card Has Benefits
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The government will not be imposing taxes on essentials like pulses. Also, the government has reduced the tax rates for 66 items under GST. These include insulin, movie tickets and cashew nuts.
If you are diabetic, you will be happy to know that the tax rate for insulin will now be 5%, down from 12%. Love nuts? The tax rate for cashew nuts has been slashed to 5% from 12%. Pickles, sauces and preserves will be taxed at 12% and not 18%. Hit the movies more often because movie tickets costing less than Rs. 100 will be taxed at 18% instead of 28%.
Additional Reading: GST Rate Revised For 66 Items
Vaibhav Agrawal, Head of Research and ARQ, Angel Broking, says “cut in the GST rates of 66 essential items is expected to ease inflation worries as well. This will also benefit the respective sectors, mainly Fast Moving Consumer Goods (FMCG), in our opinion. Additionally, the annual turnover limit to avail the Composition Scheme has been enhanced from Rs.50 lakhs to Rs.75 lakhs, reducing the burden of compliance on smaller businesses.
From the Finance Minister’s comments we believe that there could be some hope for auto companies over the high GST rates on the hybrid vehicles. Overall, we believe that the GST council, by remaining responsive, is taking correct steps to ensure smooth implementation of GST.”
Worried about shelling out more under GST? Then you need a Cashback Credit Card that can give you cashbacks of up to 10%. Or else consider saving up with a Recurring Deposit or a Fixed Deposit.
If you are falling short of cash for any of your big purchases, consider getting a loan. Yes, we have a wide range of financial products that can help you lead a stress-free life when it comes to money.