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GST Impact – A Look at 'Transitioned Needs' of the Common Man

When GST was rolled-up, the prices were expected to go down and the consumer to get benefitted. However, that will happen eventually in the long run when the benefits will start coming back to the consumer via input tax credits along with the reduction and prevention of the cascading effect altogether but that will happen only once the traders and businesses adopt the new GST tax regime completely.

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Updated:August 17, 2017, 8:32 AM IST
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GST Impact – A Look at 'Transitioned Needs' of the Common Man
Representative image. (Network18 Creatives)
Since a decade, man has evolved and there has been an evident technological transition as well. Today the needs of a common man have become much more than the traditional “roti, kapda and makaan”. After introduction of the biggest tax reform in the history of India, if the common perception that the Government has fed us, is to be believed then the prices will be cheaper than before. However the reality is a little different. The incorporation of all taxes into one tax i.e. GST, has impacted us all, especially the common man, even though certain services are exempted, the other attract a rate of tax as high as 18%.

When GST was rolled-up, the prices were expected to go down and the consumer to get benefitted. However, that will happen eventually in the long run when the benefits will start coming back to the consumer via input tax credits along with the reduction and prevention of the cascading effect altogether but that will happen only once the traders and businesses adopt the new GST tax regime completely. Whereas, initially some of the goods and services might pinch your pocket however other may be a little cheaper.

The rate of tax being levied on services has seen an increment of 3% and under the GST regime has come up to 18% which implies an increase in the price of services as of now at least.

Few of the “luxury ” services that we avail, if not regularly but occasionally are –

Dining out, which as of now has seen no significant impact of GST as earlier the restaurant charged 12.5% VAT along with 6% Service tax i.e. 18.5% however under the GST regime an AC restaurant will be charging 18% GST and a Non-AC establishment will be charging 12%.

Air travel, can be divided into 2 parts – one being the economy class which was under the earlier service tax regime taxed at the rate of 6% but now under GST is taxed at 5% thus becoming a little cheaper. However, business class has seen a substantial effect as earlier service tax was charged at 9% however now GST is being charged at 12%.

Hotel stay in high tier hotels having a tariff above ₹7500 per night have become more expensive under GST as the tax is levied at the rate of 28% which was earlier being charged ranging from 19 to 25%. However hotels having tariff ranging between ₹1000 to ₹2500 are subject to GST at the rate of 12% and hotels with tariff between ₹2500 and ₹7500 are subject to 18% GST.

Cab services, like Uber and Ola have become a major part of our life and the GST on this comes as a relief since it has been reduced by 1% and is now at 5% GST instead of the earlier 6% service tax.

Banking and insurance is something which can’t be done away with and is one service that every person avails. The tax on these services has been substantially increased to 18% GST from the previous 15% service tax.

Other household expenses include food items as well as certain packed goods or the FMGG products. Food items are subject to 0-5% GST whereas they seem to have become more expensive. On the other hand, FMGG goods like shampoos, soaps, and certain electronic items like coolers, TVs, etc have become a little less expensive.

Despite few hiccups, GST is likely to bring about more transparency thereby preventing corruption, in addition to improving the level of compliance it will also result in the change of the taxation system from the decade old production-based taxation system to a consumption-based one.
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