GST stands for Goods and Services Tax i.e. Single taxation system for a combination of many individually applied taxes. Irrespective of you are aware of not, you have definitely paid one or the other tax. The most common one being the sales tax, service tax, vat etc. Below mentioned are various different taxes which will be combined together to form GST.
- Service Tax.
- Value Added Tax (VAT).
- Central Sales Tax (CST).
- Entertainment Tax.
- Central Excise Duty.
- Other taxes (Luxury, Entry, Purchase, lotteries, Advertisement, Octroi)
Combining all the above taxes, the government has structured the GST into 5 different slabs based on the products / services ranging from daily consumption to luxury comforts.
- 5% Rate
- 12% Rate
- 18 % Rate
- 28% Rate
As per latest news, GST will be Effective from 1st July 2017 once the bill is passed in Rajyasabha. Further information can be found at Ministry of Finance website. Also, check the complete draft of GST.
How is GST going to affect employees?
According to experts, these are the POSITIVE updates:
- Planning to buy a bike or car, the price of entry-level cars to two-wheeler might decrease a bit.
- If you are planning to renovate your house or build new one or even re-paint the rented house while vacating; then you might be happy to know that the cement and paint prices are likely to fall.
- If you are a movie freak, ticket prices are likely to fall as entertainment tax will be reduced (Hopefully popcorn prices fall as well).
- Electronics items like lights, fan, coolers etc. would get cheaper.
- Cost of FMCG products such as dal, shampoo etc will reduce.
- GST would trigger employment opportunities for many youths with enhanced production possibilities.
According to experts, these are the NEGATIVE updates:
- Amenities / gifts like free food, free cab facilities etc provided to employee by the company, which is not part of CTC, could now possibly come under GST.
- If you use office property for personal use (e.g. cars) then you are likely to pay tax.
- If you are a bachelor or you eat outside a lot of time, then re-think to cook as dining out will be costlier.
- Are you a smoker? Cigarette, tobacco,tobacco products, pan masala prices likely to go up as GST rate for tobacco will increase.
- Do you make lot of phone calls, then you better start using Jio services as call rates may get costlier as well.
- Banking and Airlines services likely to be affected by the tax.
- Textiles and Jewelry price might increase as well.
- Tax on liquor
- Tax on crude oil, petrol, diesel, jet fuel and natural gas.
This being the largest disruption in tax sector after independence, the need of the hour is to spread awareness about the the GST advantages and disadvantages and ensuring all service providers must ensure their business to satisfy all the GST norms to make this successful. The GST is just implemented and the information provided above is based on current implementation; however we can expect lot of modifications over a period of time and hence one needs to follow up on the same and keep updated. Although there would be inflation as short term impact but this will help the overall GDP growth of the economy in the long run.