GST in last lap: What's in it for businesses, firms and most importantly, you?
By Team Legistify / 2017-03-31

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India on Wednesday moved another step closer to a nation-wide sales tax regime when the Lok Sabha, after a marathon 7-hour session, said yes to four crucial GST Bills.

The development will boost confidence that the implementation of the wide-ranging tax reform will meet the government's latest target of July 1. The Centre believes it will lead to revenue buoyancy. Here's what this crucial tax reform means for the industry and most importantly, you.

So what exactly is all the hullabaloo over GST about?
First the basics. Goods, as we know it, are products that one uses or consume. From laddoo to laptop, everything is classified under goods. We pay 'tax on tax' on every purchase. Most of us have to face arbitrary state taxes that keep varying. Goods like beauty products, electronic, etc., can attract an excise duty of 12.5% and a VAT of 12.5% to 15% depending on which state you are in, says Archit Gupta of Cleartax.com. This is exactly why buying a car in Haryana is cheaper due to lower road tax rates than in Karnataka or Maharashtra. It is assumed that today, a consumer pays 25-26% tax over and above the production cost of any goods. The GST bill aims to kill all this ambiguity.

Okay, I get it. But what's there in GST for me?
According to finance minister Arun Jaitley, essential items like food will be taxed at zero rate to keep a check on inflation. Common use items will be taxed at 5%, and others at 12-18%. Some goods (like textiles) which attract no excise and marginal VAT (5% for textiles) might cost more if the GST on these is kept in the 12-18% bracket. Small cars which attract an excise duty of 8% will cost more if GST is kept at the proposed 28%. Luxury cars may see 15% levy on top of the 28% rate. Other products that would be impacted by this decision are pan masala, chewing tobacco and cigarettes, aerated drinks and mineral water, and coal and lignite. More items can later be added to the list.

What about prices of services?
It is likely that all services would be taxed under the 18% bracket, says Gupta. He believes the Centre should adopt a differential tax structure for the services sector.

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