ADVANTAGES

  • Due to lower burden of taxes on the manufacturing sector, the manufacturing costs will be reduced, hence prices of consumer goods likely to come down.

 

  • This will help in lowering the burden on the common man. They will have to shed less money to buy the same products which were earlier costly.

 

  • The low prices will further lead to an increase in the demand/consumption of goods. The increased production will lead to more job opportunitiesin the long run.

 

 

  • A unified tax regime will lead to less corruptionwhich will indirectly affect the common man.

 

 

  • There is reduction in prices of FMCG goods such as shampoos, chocolates, Eating out, Small cars and DTH etc.

 

 

  • Easy procedures for registration, duty payment, return filing and refund of taxes.

 

  • More efficient neutralization of taxes to make our exports more competitive internationally.

 

  • Benefits of exemption/composition scheme for a large segment of small scale suppliers.

 

Final GST Slab rates are :.

Zero rated items : Foodgrains used by common people.

5% Rate : Items of mass consumption including essential commodities will have low tax incidence.

12% and 18 % Rate :  Two standard rates have been finalised as 12% and 18%.

28% Rate : White goods like Air conditioners, washing machines, refrigerators, soaps and shampoos etc. that were taxed at 30-31% shall be now taxed at 28%.

 

  • Proper invoicing and accounting needs to be done to ensure better compliance.

 

  • The anti-profiteering clause has been inserted in the GST Act to protect the interest of the consumers. A strict check on profiteering activitieswill have to be done, so that the final consumer can enjoy the real benefits of GST.

 

  • GST has a positive impact on Indian Economy in the long run.It helps to boost up the Indian economy and convert India into a unified national market with simplified tax regime. A rising Indian economy will anyways help in the financial growth of the common man and it will be beneficial not only to the common man but to the country as a whole and consecutively increase the GDP.

 

DISADVANTAGES

 

  • GST shall be charged @18% on maximum services and shall reach upto 28% for few services. In simple words, all the serviceslike telecom, banking, airline etc. will become more expensive.

 

  • Businessmen and service providers are still learning about the new laws. This will increase reliance on tax experts and professionals and further add to your business expenses.

 

 

 

  • All small traders and service providers dealing in interstate supply of goods or services need to get registered, pay GST and file GST returns also irrespective of the sales/income they generate (whether high or low).

 

  • The number of GST returns that you need to filee. you have to file 3 monthly returns, this amounts to total of (3*12) 36 returns plus 1 annual return.Filing 37 returns in a year…Moreover, this applies to one state, if you function in different states, you need to register in each state separately and file the respective returns and it is too much for a small trader or service provider or an online service provider who has just started working.

 

 

  • Being a new tax, it will take some time for the people to understand it Its actual implications can be seen after a certain period of time.

 

  • If actual benefit is not passed to the consumer and the seller increases his profit margin, the prices of goods can also see a rising trend.

 

 

  • An increase in inflation might be seen initially that may come down gradually.

 

 

LETS HAVE A LOOK ON CHANGES IN RATES OF CERTAIN CONSUMABLE GOODS UNDER GST:

Slabs

New GST Rates

Previous Rates

Products

1

5%

Upto 9%

Edible oil, tea, coffee, spices

Processed food items

Economy class airfares

Solar panels

2

12%

9%-15%

Processed Food

Umbrellas and Mobiles

Business class airfares

3

18%

15%-21%

Soaps, Shampoos, Hair oil, Tooth paste, Shaving Creams etc.

Budget hotels

Services like dining in restaurants, booking air/railways tickets, DTH and mobile services

4

28%

21%

Luxury Goods (Additional cess of upto 15 % may be put on luxury cars, tobacco, aerated drinks)

High-end hotels with Rs 5,000 plus tariff

 

Things that may become cheaper:

  1. Fans, air coolers, lighting, water heaters, computer monitors, printers and other entry-level electronic items
  2. FMCG goods such as soaps, hair oil, toothpastes, over-the-counter drugs etc
  3. Pharma products, Insulin
  4. Processed food items, Biscuits
  5. Ready-made clothes, including branded apparel ( up to Rs 1,000)
  6. Footwear (those priced below Rs 500 will attract 5 % and those priced above Rs 500 will be taxed at 18 %)
  7. Movie tickets priced up to ₹100 (will be taxed at 18%)
  8. Two-wheelers
  9. Cement, paint and other construction material
  10. Solar panels, Point of Sale (PoS) machines and fingerprint scanners
  11. Economy class airfares
  12. Budget hotels and restaurants (Currently, 22 % is levied on hotels and restaurants)
  13. Cab rides (Currently, the effective rate of service tax is 6 % which will get reduced to 5 %)
  14. Kerosene, coal, domestic LPG
  15. SUVs and luxury cars (Currently, they attract an overall incidence of above 50 %, which would come down to 43 %)

 

Things that may become costlier:

  1. High-end hotels with Rs 5,000 plus tariff and restaurants that serve liquor
  2. Appliances like air conditioners, television, fridge, vacuum cleaner, dishwasher and washing machines
  3. Mobile bills and internet packs
  4. Jewellery and high-end accessories
  5. Rail transportation, air travel and rent-a-cab services
  6. DTH, Wi-Fi, cable TV and courier services
  7. Small and mid-sized cars (diesel as well as petrol)
  8. Tobacco/Cigarettes, Pan Masala, Aerated drinks
  9. Luxury personal care products like deodorants, perfumes, shampoos, shaving creams, hair dyes
  10. Insurance premiums, banking charges and school fees
  11. Online Shopping (however, this is expected to be balanced by lower costs of logistics and smoother inter-state transport because of a uniform tax rate)
  12. Movie tickets priced ₹100 or more (will be taxed at 28%)
  13. Gold and gold jewellery (will increase to 3 % tax rate. Currently, most states levy 1 % VAT on gold (except in Kerala, where VAT is 5 % ) and the central government imposes 1 % excise duty on it.

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