GST Revised: Is it ready to fit your pocket?

Mere months post the hullabaloo that surrounded the implementation of the Goods and Services Tax, the government has finally revisited the existing tax structure. We look at some of the recent changes that have been introduced, some items that would be cheaper, as well as the reasons for the rehash: 

Significant GST changes just 4 months after rollout

One view that has been floating all around is; that it was necessary to reevaluate and tweak the tax system in order to rectify the consequences of a hasty implementation in the very beginning. According to another common opinion, the recent tax rate cuts have been designed to give the ruling party an advantage for the upcoming state elections.

The multiple notions on this hot topic don’t end there. Some people have also been of the view that the government that has changed its stance on GST, simply to ensure better and wider compliance and have based their decisions on the feedback received from various groups of the society. There has also been a widespread perception that many items had become costlier under the GST. There was anger among people and several protests were carried out to express the popular sentiment against the Goods and Services Tax.

Also significant is the fact that the center and the states had expected a shortfall in tax collection to the tune of Rs 17,000 crores. However the shortfall was lower than expected; it was only about 7,000 crores in August. Rs 8,000 crore was collected by way of compensation cess on aerated drinks, automobiles and tobacco, which created a surplus that facilitated the cuts.

Goods that will be cheaper from 15 November 2017

The highest tax slab of 28% too was perceived to be too high, particularly for everyday use items and services. This has been brought down to 18%. Thankfully, about 178 items will cost less from 15th November, since there will be 10% less tax levied on them. The tax levied on personal hygiene products, detergents and cleaning material, chocolate and several types of commonly used packaged foods will be 18% instead of 28%.

The tax slab for condiments, seasoning, sugar, pasta and curry paste will be reduced from 18% to 12%. Some types of packaged snacks such as chikki, revdi, and so on will also be cheaper, as the tax rate is reduced from 18% to just 5%. The slab for idli dosa batter and desiccated coconut is down from 12% to 5%, while some dried veggies, gaur meal, frozen or dried fish attracts 0% tax.


GST for food indulgences!

There’s also good news for people who like to eat out, as dining at restaurants will also become cheaper. Facilities provided such as air-conditioning will make no difference now, as compared to earlier, when AC restaurants attracted 18% GST and non-AC restaurants attracted 12% GST. Now both will attract only 5% GST. However, eateries in luxury hotels will attract 18% GST.

What else can we expect?

It is expected that commodities such as paints and cement will also become cheaper in the times to come; and that the currently applicable tax slab of 12% will be reduced to 5%. It is possible that the current multiple slab structure may be reduced to only 2-3 slabs. These and other changes are likely to be put into place as the government figures out more ways to make the system user friendly and more efficient to improve tax compliance. That's quite a relief for the moment, isn't it? 

Do you have something interesting you would like to share? Write to us at [email protected]