How will the goods and services tax (GST) regime, which is a whisker away from becoming a reality with the Lok Sabha on Monday clearing the four GST Bills, impact you?
While all eyes are now on the subordinate rules, which will be taken up by the GST Council on March 31 and the specific tax rates, which will be recommended by a committee of officers next month for the new indirect tax system to be rolled out from July 1 as slated, the impact of the regime on certain sectors and areas, and the resultant impact on consumers, has already become clear.
Here are 5 ways in which GST will impact you:
1) Goods to become cheaper, maybe: Finance Minister Arun Jaitley on Wednesday said that goods may become "slightly cheaper" once all other taxes, like the entry tax paid on goods during intra-state transit, are removed after the implementation of GST. The key word here is "may". He also clarified that commodities like food items will have zero tax. As reported earlier, fast-moving consumer goods and consumer durables segment could see a decrease in prices. (Read more)
2) Buying a house on EMI could get costlier: Equated monthly instalments, or EMIs, paid for purchasing under-construction houses will start attracting GST from July 1. Further, leasing of land and renting of commercial space will also attract GST.
Currently, for under-construction houses, service tax and value-added tax are both charged at around nine per cent. However, the real estate sector is worried about the percentage of tax to be levied, which they fear would be kept at a minimum of 12 per cent. (Read more)
The sale of land and buildings will, however, be kept out of the purview of GST. Such transactions will continue to attract the stamp duty.
3) Professionals need to keep a look out: As reported earlier, the non-compete amount given by an employer to its outgoing employee is likely to attract GST, though clarity on this will emerge only after March 31 when the GST Council meets to frame rules for the new unified tax regime. Non-compete amount is a sum paid to an outgoing employee — based on an agreement with the employer — to ensure that he/she does not join a rival company for a set period of time.
Even now, this amount attracts service tax, so you will have to keep a look out to see whether the charge on it increases under GST. (Read more)
4) Govt services will attract tax: Services such as issuing of passport, birth certificate and driving licence would attract GST, according to a revised draft of the Central GST Bill, introduced in Parliament this week. (Read more)
This is a departure from the draft Bill introduced in November, which had included these services in Schedule IV, a list of exemptions. The latest version specifically states these would qualify as “business”.
5) Luxury goods to get dearer: Brace yourself for higher costs if you like to consume what are referred to as luxury goods. The GST Council has decided to cap the cess on luxury goods in GST at 15 per cent, taking the GST rate to up to 43 per cent for these items. So, beyond the highest GST slab of 28 per cent, aerated drinks, luxury cars and luxury goods could have an additional cess of up to 15 per cent. (Read more)