Saving on Household Expenditure after GST

Brief on Savings on Household Expenditure after GST

The Goods and Services Tax (GST) came in 2017 as a consumer based unified system for indirect taxes all over India. Varying slab rates were set for different goods and services which may have saved chunks of taxpayers’ income since GST was launched.

A source in the finance ministry has revealed that according to an analysis conducted, the common man is now able to save up to Rs. 320 per month on household goods under GST. Tax rates on household expenditure for 83 items have reduced under GST as compared to the previous taxation system.

These household items include food items, cereal, beverages, toothpaste, hair oil, footwear, washing powder, tiles, furniture, toiletries, coir products, etc. Before GST, the tax charged on a household expenditure of Rs. 8,400 used to be Rs. 830. After GST, this amount was reduced to Rs. 510. Thus, a difference of Rs. 320 is being saved by taxpayers every month.

The tax rates of many other products like mobile phones, television, refrigerators, washing machines, etc. have significantly been reduced under GST. Other goods like wheat and rice have been exempted from GST.

A comparison of tax rates for items under VAT and GST is shown below:

The cascading effect of tax, where excise duty was levied on tax by state governments, was a common phenomenon under the VAT system. GST has eliminated this system of tax-on-tax, which has helped bring down slab rates.

The taxes under GST have been reduced to a great extent as compared to the pre-GST era. While some household items may have witnessed a decrease of one per cent, some others have witnessed a decrease of up to ten per cent with respect to their previous tax rates. This has lifted off the burden of tax payment from the shoulders of taxpayers. Due to the reduced tax rates, the taxpayers can now save more on their revenue and avail their necessities at the same time.

(News Source: The Economic Times )