Finally, much awaited and debated tax policy is implemented on 1st July 2017. Rates for over 500 services and 1,200 goods were fixed, or 80-90% of items were covered into the GST’s five broad rates ranging from 0% to 28%. GST move will be the biggest tax reform in Indian history. Everyone is looking for what is it in for him in this new tax policy?
What does this mean for you and your family? For an average, middle-class household, how does this tax changes your budget? Here are the ways you can save money after GST implementation.
#1. Switch to prepaid mobile plans
After GST your phone bills get heavier as GST has replaced existing service tax o 15% to 18% GST. This means if you are using post pay plan you will have to bear extra 3% tax on your telephone bills. Prepaid plans are nowadays cheaper and more competitive in the market. In prepaid also telephone operators are charging service tax/GST but same is waived off if you recharge for a big amount generally starts from ₹ 200 onwards. So if your monthly consumption is greater than ₹ 200 I would recommend you to switch to prepaid mobile plan to save on unnecessary tax.
#2. Online shopping will get costlier
Addicted to online shopping? You will have a tough time then. Most of your online shopping will get costlier after GST. Currently, there is no tax on online shopping in any form. Under GST they will collect tax at a fixed rate of one per cent while paying to their seller who is listed on their website. This will indirectly increase the burden on the end consumer.
Used to the great festival sale and big discounts? There may not be many as there will be an additional tax on it. Also, goods returns and cancellations are going to face a problem. They will collect tax at source, they have to bear the tax amount on their own and claim refunds from the government in case of returns and cancellation. The e-commerce company will have to have more cash flow to fulfill their returns and cancellations. Many of them will change their return policy soon.
#3. Fly through economy class
Traveling in business class will become expensive as after the rollout of GST, the tax rate will increase from 9 per cent to 12 per cent.
However, GST on economy class is set at 5 percent, lower than the previous 6 percent.
#4. Quit smoking
This is been one of the favorite subjects, as India is the second largest in consumption of tobacco with 275 million users. How will GST impact this multi-million dollar industry? Till now excise duty is charged on the manufacturing of cigarettes, bidi, and other chewing tobacco products at different rates. Under GST, there will be an additional cess charged on the tobacco-related products, over and above the GST charged at the rate of 28%.
This means you have to shell out more money on cigarettes and other tobacco products. Quit smoking will help you save money and your health as well.
Though overall GST rollout is beneficial for the country and an individual but for a layman, it will take the time to fully understand the impact of GST on his pocket. My advice is to be little cautious on every transaction you do at least at the initial period.
If you want to know how to save money every month, check this out.