GST launched in India: Shoppers fear household expenses will increase | business-news | Hindustan Times
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GST launched in India: Shoppers fear household expenses will increase

Under GST, daily consumption items such as milk, fruit and vegetables, foodgrain, pulses and cereals have been exempted from tax. Sugar, tea, coffee, edible oil and newsprint have been placed in the lowest slab of 5%.

business Updated: Jul 01, 2017 09:33 IST
Sapna Agarwal
An illuminated Parliament ahead of the midnight launch of 'Goods and Services Tax (GST)' in New Delhi on Saturday.
An illuminated Parliament ahead of the midnight launch of 'Goods and Services Tax (GST)' in New Delhi on Saturday. (PTI)

Household expenses will go up. Eating out will be costlier. Watching movies at a multiplex will cost more, as will staying in premium hotels.

Air conditioners and television sets will be more expensive. Salon and spa services will cost more.

The general perception is that even buying a house and then furnishing it will cost more once the goods and services tax (GST) kicks in on 1 July, say consumers.

“Overall there will be some escalations in costs. Everything will become more expensive. There will be very few basic things that will become cheaper,” says Rajesh Kurup, 40, an architect in Mumbai, who expects no relief to consumers from GST, at least in the short term. In the long term, it could be different, he says.

Under GST, daily consumption items such as milk, fruit and vegetables, foodgrain, pulses and cereals have been exempted from tax. Sugar, tea, coffee, edible oil and newsprint have been placed in the lowest slab of 5%.

When it comes to packaged consumer goods, most items like detergents, hair creams and colours, shampoos, liquid detergents, liquid soaps and instant coffee are under the highest tax slab of 28%. Soaps, toothpastes and hair oils have been spared.

The GST rate for these goods is higher than under the current tax regime, where the indirect tax on most packaged consumer goods is in the range of 20-24%, said a 19 May report by Nirmal Bang Equities Pvt. Ltd.

“We will be paying more for everything—from eating out at restaurants to buying air conditioners and television sets,” says Aparna Shinde, 26.

Shinde says goods like televisions, refrigerators and air conditioners are household necessities today. Also consumers like herself are frequenting restaurants more often. “To continue to lead the same lifestyle under GST will cost more,” she says.

Pankaj Sharma, 30, a digital marketing executive, agrees with Shinde. “The costs of everything from mobile bills to eating out at restaurants, travelling and staying at hotels will be more expensive. Even branded clothes will become more expensive,” he says.

With multiple messages on social media on GST and the expected tax rates on various goods, consumers are confused about what the real impact will be.

“I am not really sure what will happen... There are so many different news reports on social media about the prices of various goods—some will increase, some will decrease. but we will know the reality only on 1 July,” says Vishwajit Mane, 33.

According to Mane, the general perception is that GST will improve ease of doing business for corporate entities but for consumers, it may only increase expenses.