The Goods and Services Tax (GST), India’s biggest indirect tax reform brings in radical tax reform that affects all, particularly Indian businesses of all sizes. Big corporates will be as much affected by the GST rollout as small and medium enterprises (SMEs) or startups—backbone of the Indian economy. India has a total of 36 million SMEs and, globally, the country can boast of 3,100 startups—one of the highest in the world. No doubt, all businesses will be affected. Therefore, the change is huge and the canvas extensive. The GST Network (GSTN) is expected to throw up 5 billion invoices a month. Add to it the 50 million enterprises in India together with 15 million retailers that need to go for digitization of sales.
But the most affected will be the common man. The GST council, which is responsible for issuing the set of rates, has finalized GST tax slabs for goods and services. Whereas 7% items are exempt, 14% are in the lowest bracket of 5%. Around 17% items are in the 12% tax bracket, 43 in 18, and 19% in the top tax bracket of 28%. This translates to the fact that the majority of items attract 18% or less GST. Even 18% is a sizable proportion.
Though rates of key daily use items such as sugar, tea, and hair oil may come down, there is an increase in luxury products–getting a GST software would be the most beneficial. Eating out is more expensive, particularly, in a five-star restaurant which has been placed in the highest bracket. I have broken down how the rates under GST rollout compare with the previous tax structure. Here it goes…
Toothpaste and branded cereals to cost more: Consumer Goods Category
Rates go up For Mobile Phones, Refrigerators: Lifestyle, Home Category
Wallpaper and Paints In Highest GST Slab: Construction materials
Plastic Products Cost More: Category: Others
Dining Out and Phone Calls Are Costlier: Services Category