Impact of GST
Being hailed as the biggest tax reform in India, the GST rollout is expected to redefine the entire tax system across all sectors. Unifying all taxes under one tax as ‘Goods and Services Tax', is truly a revolutionary step aimed to curb the impact of inflation on basic commodities. The GST slabs are fixed at 0%, 5%, 12%, 18% and 28%.
Let's get a glimpse of how GST impacts real estate, automobile, personal loans and credit cards, and shopping.
Impact of GST on Home Buyers
With the latest Real Estate and Regulations (RERA) already in place, the real estate is facing massive changes regarding transparency and accountability. While the prices of the property may not go down, positive changes are foreseen with the establishment of GST tax system.
Buyers who have bought properties that are under-construction may enjoy a 12% of taxation, excluding stamp duty and registration charges while ready-to-move-in properties will be taxed at 18%.
GST on Automobile
Good news for luxury car lovers is on the cards under GST regime as prices of high-end cars are likely to go down by 4% to 9%. Meanwhile, the compact car buyers to enjoy a marginal dip in the overall price.
When it comes to bikes, there is both good and bad news under GST tax system. Aspirant two-wheeler buyers who plan to own fuel-efficient bikes below 350 cc engine will reap the benefit of GST as the prices will plunge by 5%.
However, high-end bike lovers will have to shell out the extra penny from their pockets as two-wheelers with 350 cc and above are set become more expensive.
GST on Credit Cards and Personal Loans
Financial services are put to 18% of GST slab. Hence the service tax on the credit card transactions will attract the same percentage of tax which is higher than the previous 15% of tax.
Home, auto, and personal loans are not likely to go up as service tax is not levied on them. However, processing fee, prepayment charges will go up as they attract service taxes.
GST on Shopping
Shoppers will enjoy cheaper prices on essential products while the prices of luxurious items will spike under GST taxation.
GST may not play a friendly game with the e-commerce sector as it presents certainly constrains to the online shoppers.
• Prices of the products might go up due to tax collected at source.
• Returns and cancellations may become difficult as the e-commerce companies must pay the tax on their own and get the return only later from the government.
• Freebies and discounts may not be there as they attract additional tax under GST.
• The biggest positive change is your online order will reach you faster as the retailer will not have to file a separate paper for each state.
Petroleum products, liquor, and electricity are kept outside the gambit of GST tax system. With the newly imposed tax regime, major changes are foreseen across all sectors in India. It will take a while for the consumers to adjust to the new tax environment. Let's believe GST will simplify the financial services across the country and improve the economy.