Finance

What Is The Importance Of Goods And Services Tax In Our Daily Life?

Implementing the goods and services tax is the biggest ever indirect tax reform in India since independence. In one stroke, numerable direct and indirect taxes were brushed under the carpet in favour of one unified tax regime.

GST’s implications are not only for the industry but also for common people. GST rates determined by HSN (Harmonised System of Nomenclature) and SAC (Services Accounting Codes) have led to changes in prices of various goods and services.

The impact of these changes has influenced common people the most.

Stabilisation Of Prices

GST, in the long run, has resulted in the optimising and stabilising of prices of essential products and services used. It has reduced the cascading impact of indirect taxes and introduced more input credits. Inflation has been checked effectively to an extent after introducing GST.

Marginal Increase In Upfront Costs

Before GST, the maximum tax chargeable under VAT (Value Added Tax) and Service Tax regimes was 15%. GST, in one go, had taken this up to 28%. However, most of the products services related to daily use of commoners are charged at 18% rate,

This increase of 3% tax has driven up the prices of most commodities.

Impact On Restaurant Bills

If you occasionally eat out in restaurants, you are paying lesser than before. Earlier, for a meal of INR 1000 at a restaurant in a metro city, you were expected to pay 12.5% VAT and 6% service tax, i.e. your tax liability was INR 185.

Under GST regimen, the tax was earlier fixed at 18% for A.C. restaurants, which has been revised to 5%. This implies that for the same value of food, you are now paying just INR 50 as tax. This will undoubtedly have an indirect effect on your daily budget.

Household Expenses

You can afford to cut your restaurant bills, but you cannot do away with household items needed for hassle-free living. GST has brought you great relief in the form of a mere 0-5% tax on food items which is not likely to go up.

Different FMCG items like toothpaste, shampoos, tissue papers, soaps, pharma items etc. have become cheaper. The prices of televisions, air coolers and other such essential items have gone down. However, the tax has been increased by 3% on services like dry cleaning, haircuts, etc.

Overall, your household budget has benefited from GST.

Better Transparency

GST has brushed an array of local and central taxes under the carpet. This has brought greater transparency in the taxation system. All service providers and merchants are capable of showcasing compliance to tax filing within stipulated dates.

After completing gst verification, any vendor can claim input credit on taxes already paid during different stages of the supply chain. The taxation system has been transformed from production-based to consumption-based.

The various monetary benefits reaped by businesses are indirectly passed on to customers and common people. As a consequence, GST is shielding your daily budget from inflation.

Optimised Provision Of Services

If you are a service provider, you no longer need to experience the hassle of filing different tax returns or knock at the doors of various government officers to secure clearances. GST has done away with red tape to a significant extent and streamlined your daily business processes.

The comprehensive GST portal offers an entire array of services like return filing, compliance monitoring, and payment and registration under one roof. You could enjoy the flexibility of rectifying and re-filing returns if any error had crept in by mistake.

This offers you the freedom from paying hefty fees and valuable time to lawyers. These can be invested to enhance the profitability of your business through efficient daily transactions. The cost of legal compliance has decreased remarkably.

If your business involves daily transportation of goods from neighbouring states, you are now free from the tedious process of toll clearance, octroi payment, etc.

Conclusion

The importance of GST in our daily lives cannot be assessed only on the cornerstones discussed above. GST is proving advantageous for the common man in various apparent and intangible ways.

You must have trimmed or expanded your needs related to various services and commodities so as not to go overboard with the allocated budget. However, as GST continues to evolve, you can expect more benefits to come your way in the long run. These shall certainly enable you to go about your daily life with more monetary freedom and safety.

Author Since: Oct 17, 2018

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