Here's how GST rates will impact your monthly household budget

The Good and Service Tax has been rolled out. Finance Minister Arun Jaitley had stated that those food items which were imposed an average of 12.5% under the VAT laws will subsequently be cut-down to 5% under the new GST regime.


As per the GST law, all items falling under its regime will be imposed tax rates at 5%, 8%, 18% and 28%. GST will not have any impact on the list of products and services which come below the term ‘Essential’, and this list will have zero tax rate.

A survey by All India ITR shows that personal care products, entertainment activities and household items under GST will become cheaper than its current rate. However, many of the services such as mobile phone services, healthcare services as well as transportation charges are expected to attract a tax rate of 18%, which is 3% more than its current 15% tax rate.

Once the new rates will come into action, your monthly household budget will also be impacted. The analysis shows that entertainment tax rate under GST will successively be reduced to a 28% tax rate as against its current 30% tax rate.

The effect of GST on the current tax rate

To keep a surveillance of the goods manufacturers and service providers, the GST council has also taken the resolution to form an anti-profiteering committee. This committee will be the authority responsible for taking care of the grievances to ensure that the benefit of GST upon the lower tax rates doesn't get tampered. It has been declared that the committee will be formed by officials of the central and state revenue departments.


A List of Items Exempted from GST

Here are a few commonly utilized goods and services which have been exempted from the GST regime.

Unprocessed cereals (rice, wheat etc.)

Unprocessed proteins (milk, vegetables, meat, fish etc.)

Train travel via local and sleeper class.

Education.

Healthcare (exclusive of medicines).

Hotel stay or lodges with room rented at less than Rs. 1,000.

Kid’s Stationery items (color pencils, crayons, drawing books etc.)

Bindis, sindoor, bangles etc.


All India ITR summarizes that the upcoming GST Law will have its own sets of pros and cons - many necessities will get cheaper but in the meanwhile, the rest of the necessities that falls under the higher GST tax rate bracket will ultimately cause a discomfort in the household budget. GST rates will also bring about a bigger tax burden on the use or purchase of goods and services which are deemed as luxurious.

(This article has been written by Vikas Dahiya, founder, and CEO of All India ITR)