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30 Jun 2017

GST: How India's largest tax reform impacts your monthly budget

GST impact on your monthly budget

On July 1, the Goods and Services Tax (GST) will come into effect across India.

The GST is the single largest tax reform India has undertaken since its Independence.

The GST, termed a potential game changer, is based on the concept of "one nation, one market, one tax."

But what does this mean for you? How will it impact your monthly budget? We explain.

In context

GST impact on your monthly budget
Aerated drinks, tea and coffee to cost more


Aerated drinks, tea and coffee to cost more

The cost of tea and coffee will see a marginal increase. Both are currently taxed at 3-4% which will be increased to 5% under GST.

Aerated drinks will be more expensive as they will attract a 28% tax, as will tobacco and luxury goods.

Processed food items are expected to cost less by being taxed at 5%, down from 10% currently.

Eating out to get more expensive

Eating out at an air-conditioned restaurant which serves liquor would levy a tax of 18%, while non-AC/non-liquor eatery would attract a 12% GST tax; up from 6% VAT. However, restaurants having an annual turnover of less than Rs. 75 lakh would attract a 5% tax.

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Mobile bills

Cell phone bills to get dearer

Your phone bills will likely go up as the tax rate on telecom services will increase from 15% currently to 18%.

Postpaid connection users having a bill of Rs. 1,000 will have to shell out Rs. 30 more.

The talktime on a Rs. 100 prepaid voucher will decrease to Rs. 82 as compared to Rs. 85 currently.

Watching movies in theatres

Movie tickets priced below Rs. 100 will attract an 18% tax rate while others would be taxed at 28%. Whether the price of tickets would increase or decrease would depend on which state you live in as entertainment tax has been a state subject.

Cab rides, economy class flights to cost less


Cab rides, economy class flights to cost less

Ola and Uber cab rides, as well as AC train travel will cost less by attracting a GST rate of 5%.

Traveling by air in economy class will be marginally cheaper as it attracts a 5% tax as compared to 5.6% previously.

Business class travel flights will cost more with the higher 12% GST rate, compared to 8.4%.

Prices of soaps and toothpaste to decrease

The cost of personal care products such as soaps and toothpaste will decrease as they will now attract an 18% tax as opposed to 24-28%. Deodorants, shaving creams, after shave, hair shampoo and sunscreens will attract a 28% tax rate.

Hotel stay

Cheap hotel rooms to get cheaper and vice versa

Hotels rooms having tariffs lower than Rs. 1,000/day will be cheaper as they are exempt from GST.

Rooms priced between Rs. 1,000-2,000/day will also be cheaper by attracting 12% GST.

Rooms with tariffs of Rs. 2,000-5,000/day and above Rs. 5,000/day will cost more by being taxed at 18% and 28%, respectively.

Your clothes shopping bill may increase

Clothing and footwear

Your clothes shopping bill may increase

The cost of clothes priced below Rs. 1,000 will remain unchanged as they will continue attracting a 5% tax.

Clothes above Rs. 1,000 would witness increased prices as tax rates would rise from 8% currently to 12%.

Footwear priced below Rs. 500 would attract a 5% GST while those priced higher would attract an 18% levy, causing their costs to increase.

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