Indirect Tax Increased or Decreased: GST ?

GST is predicted to be beneficial to Indian economy and bring a lot of indirect tax burden reduction for each Indian public. GST one of the biggest amendments in Indian Constitution is applied from 1st July, 2017.

Products such as grossary items, milk, egg, cereals - which are common to all and form basis of day to day life are made tax free while, tax on most of services are soaring. Few of them are listed below:

Items / Commodities	Before GST (%)	After GST (%)	Gross Tax Impact
Eating Out	6	18	Increased
Phone Bills	15	18	Increased
Jewellery	2	6	Increased
Online Shopping		Fixed Rate	Increased
Banking and Insurance	15	18	Increased
Travelling	6		Increased

Items / Commodities	Before GST (%)		After GST (%)	Gross Tax Impact
Buying a car		12.5% + VAT	18	Decreased
Televisions		24.5	20	Decreased
Movie Ticket				Decreased
Processed Food		24-25	17-19	Decreased
Cement		25	18-20	Decreased

Many people have shown fade clarity on tax increased on restaurants misunderstanding tax on eating out has increased 18% in all restaurants. Recently, source from Income tax department made lucid statements on actual tax levied on restaurants - “The GST levied on restaurant bills would be either 12% or 18% based on restaurant category. The category is formed based on AC ambience and alcohol availability. In AC restaurants and non – AC restaurants with alcohol or wine 18% GST to be paid while, in non – AC restaurants 12% GST is applied. From the collected GST 50-50% will go to each central government (CGST) and state government (SGST). “

Summary:

·         AC Restaurants – 18% GST (9% CGST + 9% SGST)

·         AC or Non-AC Restaurants serving alcohol– 18 % GST (9% CGST + 9% SGST)

·         Non AC Restaurants – 12% GST (6% CGST + 6% SGST)

Present GST policy insinuates very significant information – an imperative attempt to bridge the gap between rich and poor in Indian Society. Words “rich” and “poor” are like two opposite poles of a magnet which are separated by a strong repelling power. This is not just a theoretical but practical situation in India. Several development plans and strategies were implemented to curve poverty and reduce population count below poverty line. However, the magnetic force separating rich and poor boundary is strong enough to keep them distance irrespective of thousands of strategies proposed and implemented so far but no longer anymore.

I believe GST is a calculated and pragmatic tool being deployed under current government in power to nullify repealing force which would give a bright above poverty India soon.  Although the government has taken first step towards public welfare through GST, it is going to be a long race against poverty which would demand equal yet genuine participation and support from people.