- Date : 24/08/2017
- Read: 4 mins
With GST put into play, your spending habits are sure to change. Here are the different ways that this reform affects you.
On July 1, 2017, the nation welcomed its biggest indirect tax reform. Since then, there have been several changes in the life of a common man, especially when it comes to spending money daily. Don’t know exactly how this change affects you? Here are some everyday situations where GST will impact your spending habits.
Costlier morning routines
According to a research by International Data Corporation, a significant number of people check their smartphones within the first 15 minutes of waking up. While this is an established trend, it can be avoided.
What cannot be avoided is going to the washroom and cleaning yourself up in the morning, and this routine can cost you more now. Prices for basic consumables such as toothpastes, razors, shaving creams and after shave have increased post GST. These were previously taxed at 26%, but are now have a tax rate of 28%.
However, taxes on traditional items such as tooth powder have reduced to 12% from the earlier 26%. Additionally, soaps now attract 18% tax as against the earlier 26%.
Life is a party, dress for it
GST has had quite an impact on the price of clothes, especially if you aren’t brand conscious. You now pay a lower tax of 5% on clothes that cost less than Rs. 1,000. But there’s no such luck for those who are brand conscious—you continue to pay the same tax of 12% on man-made apparel costing more than Rs 1,000.
GST has also affected the cost of footwear. Countrywide, manufacturers are looking to increase footwear prices by 5-7%. This is likely to have a major impact on leather footwear. Other leather accessories such as bags could also cost more now due to an increased tax rate of 28% from 6%.
Personal grooming has become more expensive under GST. Items are now taxed at 28%, which is 2% more than the previous tax, including-
- Hair creams and dyes
Food: One of our main necessities
Breakfast is the most important meal of the day. It could now become cheaper too.
Several popular breakfast items, such as corn flakes, coffee, tea, ready to eat namkeen, condensed milk, etc. now attract a lower tax. For example, the tax rate on coffee and tea has been reduced to 5% from 6%. Items such as fresh milk, vegetables and fruits continue to remain exempt from tax. Other edible items such as vegetable oil, soups, ice-creams, food mixes, etc. have also become cheaper.
However, GST has resulted in a price rise for butter and branded cereals, making them slightly more expensive.
To travel is to live
GST has brought in some good news for Uber and Ola customers. Earlier, a service tax of 6% was levied on such rides. However, under GST, this tax rate is now 5%.
If buying a car is on your mind, you have another reason to cheer. Both, small cars and sedans are seeing reduced tax rates. GST also affected air fares. The tax rate on economy class tickets has reduced to 5% from the earlier 6%.
Business class tickets, however, are now taxed at 12% from the previous rate of 9%.
Entertainment and night outs
A regular night out could cost you less than before under GST. Air-conditioned restaurants that serve alcohol now charge 18% tax, reducing by 4%. You also pay a lower tax for eating at non- air-conditioned restaurants that do not serve alcohol.
However, be prepared for higher bills if you dine at five-star restaurants, which has seen a sharp increase of 10% in tax rates. Other entertainment options such as movie theatres, televisions, video game consoles and pianos are now taxed higher than before under GST.
Health is wealth
While many other products and services have been impacted, GST has not affected tax rates of medical supplies such as human blood and contraceptives. Additionally, there is no change in taxes on ayurvedic, unani, siddha and homeopathic medicaments either; the rates for these continue to be 12%.
Similarly, the cost of allopathic medicines is likely to remain unaffected. However, your insurance premiums will increase- The earlier service tax of 15% on insurance services has now been hiked to 18% under GST.
Education and everyday stationery
GST will not affect the education sector, confirmed the finance ministry. Education fees will continue to enjoy the same tax incidence as before. The cost of basic stationery items, such as fountain pens, ink pens, and printed books are also unlikely to change. Moreover, the tax on items such as geometry boxes has reduced to 5% from 18.5%.
To sum it up
It is believed that the beginning of anything is always the toughest. GST is India’s newest baby, and has affected several sectors in the country. Only time will tell exactly what kind of impact the move has had on the lives of the common man.