With the implementation of GST in the country, there has been a significant impact on the businesses as well as the monthly budget of the common man. Based on the GST treatment, the prices of the goods and services will either increase or show a decline.
When an individual eats at a restaurant, the GST rate will be either 5%, 12% or 18% depending on whether the restaurant is under the composition scheme, whether it is air conditioned or non-air conditioned. Earlier, there was a service tax and VAT charged on the invoice which varied from restaurant to restaurant. The replacement of GST with the indirect taxes has made it easier for the customer to understand how much amount is going to the government.
Indians spend a huge amount on the purchase of gold; the implementation of GST has increased the rate of tax by 1 per cent. Earlier, the tax on gold was 2% in most states and 5% in Kerala. The GST rate has increased the tax from 2% to 3%.
For property under construction, there is a significant impact with the implementation of GST. The rate of GST is 12%, with the ability of the builder to avail all the input tax credits which results in a low cost being passed on to the buyers by commensurate reduction in prices. If the builder has already purchased the construction material, availing the credit of input tax will not be possible. However, for the properties under construction, the consumers will be charged for additional tax without any actual reduction in the construction value. Earlier the rate was 6% which has almost doubled with the implementation of GST.
Education and healthcare
Primary education and primary healthcare are exempt from GST. With respect to expenses like healthcare and education, it has been kept outside the ambit of GST. This means that there is no tax to be paid on the amount spent on these by the consumer, but the tax burden is included in the fees as the service provider in these sectors will not be eligible for input tax credit.
Buying a car
When it comes to purchasing a car, the GST rates have been kept almost the same. However, with the transition into GST, there have been issues in maintaining the prices of the cars manufactured before GST but sold after the implementation of GST. Since the excise duty on the manufacture has already been paid but with the sale of car, it will attract a higher GST rate as against a lower VAT rate. Due to this, discounts are being offered to clear the inventory lying with the dealers.
Thus, it can be said that the government has kept the consumer’s interest in mind while deciding the rates of GST, which has also made the consumer aware of the impact of GST on their purchases of luxury products and commonly used products.