Cheaper Or Costlier? How GST May Impact Prices Of Goods

Since GST is meant to eliminate "tax on tax", experts say overall tax burden on goods is expected to fall over time.

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Cheaper Or Costlier? How GST May Impact Prices Of Goods

Under GST, items like unpacked food grains, gur, milk, eggs and salt won't attract any tax


Highlights

  1. Experts say overall tax burden on goods is expected to fall over time
  2. Banking and financial services get costlier
  3. GST changed the indirect tax landscape of the country
GST or goods and services tax changed the indirect tax landscape of the country from July 1 by subsuming over a dozen of state and central taxes. Since GST is meant to eliminate "tax on tax", experts say overall tax burden on goods is expected to fall over time. Many essential goods such as unpacked food grains, gur, milk, eggs and salt won't attract any tax under GST. Some services will get costlier as banking and financial services have been put in the 18 per cent rate slab under GST, from 15 per cent earlier.

"However, going forward, it is expected that due to reduced cost because of availability of GST credit on items hitherto not available, the price of services will also come down which will benefit the consumers," says Sandeep Sehgal, director-tax and regulatory at Ashok Maheshwary & Associates LLP.

After GST rollout, many items like footwear below Rs 500 and garments could become cheaper. On the other hand, items like TV and small cars could become costlier.

Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of GST as of now. The GST Council will take a decision on it at a later date. Alcohol has also been kept out of GST.

Here is the list of goods, their current effective tax rates and respective GST rates under the new tax system, according to professional services firm EY:
ItemsEarlier Rate (%)GST (%)
Perfume17.5 - 2718
Cosmetics28
Cheese5-14.512
Butter12
Glucometers11-20.512
Tableware - Metal1118
 
Revised 12% for spoons, forks, ladles, skimmers, cake servers, fish knives, tongs
Tableware - Ceramic17.518
Tableware - Wood18 and 28
Tableware - Plastic18
Kitchenware - Metal11-20.518
 
Revised 12% for Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs
Kitchenware-Ceramic17.5 - 2718
Kitchenware-Wood18 and 28
Kitchenware-Plastic18
Kitchenware-Fly ash18
X-Ray Apparatus (for medical, dental & veterinary)17.5-2712
X-Ray Apparatus28
   
Footwear (below Rs. 500)14.415
Footwear(above Rs. 500)14.4118
Readymade garments (below Rs. 1000)5-65
Readymade garments (above Rs. 1000)18.512
Biscuits( Less than Rs. 100/kg)11.8918
Biscuits(Above Rs. 100/kg)16.0918
Corn-flakes9.8618
Wrist watch20.6428
Jam5.6618
Baby food (sold in unit containers)7.0618
   
Small Cars (<4m <1200 cc petrol)25-2728+1 (cess)
Small Cars (<4m <1500 cc diesel)25-2728+3 (cess)
Mid-segment (<1500 cc)36-4028+15 (cess)
Cars with 1500 cc & larger engines41.5-44.528+15 (cess)
Vehicles for transport with 10 to 13 passenger capacity (cannot be considered as bus)39-4128+15
   
Motorcycles25-3528
Motorcycles Engine >35025-3528+3 (cess)
Television25-2728
   
Stationery (Plastics)11-2718
Stationery (Paper)12 and 18
 
Rates revised on following items from 18% to 12% - Exercise books and note books
 
Stationery (Pen/Fountain Pen) 
 
Rates revised on following items from 18% to 12% - Eraser
 
Renewable energy devices17-185
Iron Ore17-185
Digital Cameras25-2728
Luxury items like yacht25-2728+3 (cess)
Music Instruments (Handmade)0-12.50
Music Instruments (Other than Handmade)25-2728
Powered by EY

Notes from EY:
-These are illustration purposes only, not meant for direct implementation or reliance
-These rates are based on the best of our understanding of the applicable rates and should not be taken as an assurance of ultimate rates.
-Information as of June 20.
-EY assumes no responsibility to update for changes in after the date of the submission.


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