How GST Impacts Basic Expenses

Goods and services tax (GST) is to be executed from 1st july at a function in Delhi, confirms Arun Jaitley. It has impacts on some basic expenses like automobile, life insurance, hotel stay, gold ornaments, refined cooking oil, air travel, train travel, telecom, eating out, apparel, entertainment etc. This indirect tax reforms is being touted as the biggest tax reform since Independence. GST has been proposed with four slabs starting from 5%, 12%, 18% and 28% being the highest.  Traders of GST has to file three returns each month. The online filing system ends up processing 5 billion invoices a month approximately. Requests have been made by some business groups for the roll out to be delayed or allow them more time to get ready. Relaxation until September is allowed to ensure that it doesn’t impact or hurt small traders or others who may not be ready for the new arrangement. In favour, the council has approved for creation of anti-profiteering authority. The committee will prevail for two years while clearing some pivotal elements of the tax framework. Any complaints of profiteering would reach the standing committee, it would be then forwarded to the Directorate of Safeguards(DGS) for investigation. On completion of investigation, it would be handed to anti-profiteering authority to decide upon the penalty to be charged.It has its well-defined set rates as follows:Automobile - Small cars (30%-29%) Suv’s (55%-43%) and bikes under 350 cc will draw 28 % instead of 30% as per old tax structure, above 350cc additional 3% cess. Electric vehicles are also not an exception to GST, they will  cost more as 12% tax will waive off. The 28% tax on spare parts is suggested and for services, tax will get higher by 3%.Life insurance- While the premium of non-life policies and term plans are taxed, only charges like mortality, AMC charges etc in other life insurance policies attract GSTGold- 3% GST on gold and 5% on making charges Hotel Stay- Below 1,000 no GST to pay, anything above 5,ooo attracts 28%Refined oil- Prices of hair oil will stay high due to 18% GST.,but coconut oil being refined cooking oil, will be taxed at 5%, all oil seeds and edible oils are taxed at 5%. It is not much affected as it already draws 5% VAT.Train travel- Only first-class and AC compartment travellers will pay more, others are not affected. Transport of goods by railways will pull 5% of GST .Eating out- 28% GST at restuarant in 5 star hotels, if non AC, only 12% is chargedApparel- Garments below 1,000 INR been brought down from 12% to 5%Grocery items- GST hit on food items and monthly household budget can be significant. Processed foods can cost more than your essential food groceries, everyday consumed food items like most milk products, coconut water, eggs are exempted from any tax. Some of the food items are placed under 18% slab they include: Condensed milk, corn flakes,malt, jams, soups, margarine, vegetable fats or oils, refined sugar (containing flavouring), preserved vegetables and fruits, pasta, noodles, pastries, cakes, ice cream, sauces, tea and coffee extracts and mineral water.However substances containing sugar like chocolate, chewing gums, wafers, syrups, cold drinks and other sweeteners are topped the slab with 28% GST. * This includes excise, sales tax, VAT, entertainment tax, luxury tax, etc; Average tax considered.This system will help economy become more efficient and we should anticipate greater benefits for everybody. The primary idea is to create an undivided Indian market for an efficient economy.For more information Click here
Piuesh Daga
Rated 4.0/5 based on 20 customer reviews
Sort by :

How GST Impacts Basic Expenses

Piuesh Daga
Blog
03rd Jul, 2017
How GST Impacts Basic Expenses

Goods and services tax (GST) is to be executed from 1st july at a function in Delhi, confirms Arun Jaitley. It has impacts on some basic expenses like automobile, life insurance, hotel stay, gold ornaments, refined cooking oil, air travel, train travel, telecom, eating out, apparel, entertainment etc. This indirect tax reforms is being touted as the biggest tax reform since Independence. GST has been proposed with four slabs starting from 5%, 12%, 18% and 28% being the highest.  Traders of GST has to file three returns each month. The online filing system ends up processing 5 billion invoices a month approximately. Requests have been made by some business groups for the roll out to be delayed or allow them more time to get ready. Relaxation until September is allowed to ensure that it doesn’t impact or hurt small traders or others who may not be ready for the new arrangement.

In favour, the council has approved for creation of anti-profiteering authority. The committee will prevail for two years while clearing some pivotal elements of the tax framework. Any complaints of profiteering would reach the standing committee, it would be then forwarded to the Directorate of Safeguards(DGS) for investigation. On completion of investigation, it would be handed to anti-profiteering authority to decide upon the penalty to be charged.

It has its well-defined set rates as follows:

Automobile - Small cars (30%-29%) Suv’s (55%-43%) and bikes under 350 cc will draw 28 % instead of 30% as per old tax structure, above 350cc additional 3% cess. Electric vehicles are also not an exception to GST, they will  cost more as 12% tax will waive off. The 28% tax on spare parts is suggested and for services, tax will get higher by 3%.

Life insurance- While the premium of non-life policies and term plans are taxed, only charges like mortality, AMC charges etc in other life insurance policies attract GST

Gold- 3% GST on gold and 5% on making charges 

Hotel Stay- Below 1,000 no GST to pay, anything above 5,ooo attracts 28%

Refined oil- Prices of hair oil will stay high due to 18% GST.,but coconut oil being refined cooking oil, will be taxed at 5%, all oil seeds and edible oils are taxed at 5%. It is not much affected as it already draws 5% VAT.

Train travel- Only first-class and AC compartment travellers will pay more, others are not affected. Transport of goods by railways will pull 5% of GST .

Eating out- 28% GST at restuarant in 5 star hotels, if non AC, only 12% is charged

Apparel- Garments below 1,000 INR been brought down from 12% to 5%

Grocery items- GST hit on food items and monthly household budget can be significant. Processed foods can cost more than your essential food groceries, everyday consumed food items like most milk products, coconut water, eggs are exempted from any tax. Some of the food items are placed under 18% slab they include: Condensed milk, corn flakes,malt, jams, soups, margarine, vegetable fats or oils, refined sugar (containing flavouring), preserved vegetables and fruits, pasta, noodles, pastries, cakes, ice cream, sauces, tea and coffee extracts and mineral water.

However substances containing sugar like chocolate, chewing gums, wafers, syrups, cold drinks and other sweeteners are topped the slab with 28% GST.

 * This includes excise, sales tax, VAT, entertainment tax, luxury tax, etc; Average tax considered.

This system will help economy become more efficient and we should anticipate greater benefits for everybody. The primary idea is to create an undivided Indian market for an efficient economy.

For more information Click here

Piuesh
Blog Author

Piuesh is the cofounder of White Matter Advisory and is responsible for the overall delivery and execution at WMA. He profoundly believes in significance of financial literacy in emerging markets. He is the youngest amongst the co-founders with an overall experience of 7+ years in the banking industry.

Leave a Reply

Your email address will not be published. Required fields are marked *

SUBSCRIBE TO OUR BLOG

Follow Us