Plan your Household Budget Under the Norms of GST Rate in India


Hardly few weeks left, until Goods and Services Tax(GST) is all set to get announced. India’s biggest tax revamp had undergone its final hurdle when GST Council gave its consent to tax gold and jewellery at 3 per cent tax rate.

With GST Tax Rates to become effective from July 1, it’s best to check if your monthly budget will fall under the paradigms of the new tax regime. Let’s check out the following items which are likely to be affected by GST.

gst rates

Gold: Gold is the most preferred financial instrument that has been loved across generations throughout years. A new tax bracket has been set for gold, diamonds and silver as per the announcement made by GST Council on June 3. This council has fixed the tax rate at 3 per cent. Although, the current excise duty on gold was 1 per cent and 1 per cent VAT in most of the states. With 3 percent, gold will become costlier from July onwards.

Banking Charges: There will be likelihood in an increase in the transaction fee on various banking and financial services as GST will be levied on these services under 18 per cent tax rate from the existing 15 per cent.

Eating Out: There are various tax slabs for restaurants based on their turnover and with air-conditioning facility.

Restaurants with a less turnover of ₹ 50 lakh will attract a tax rate of 5 per cent. Non-AC restaurants will attract a GST of 12 per cent on the food bill. The tax rate for AC restaurants and with liquor licence will attract a GST of 18 per cent as compared to 28 per cent GST applicable on 5-star restaurants.

Eating out will prove to be expensive in cities like Mumbai where the current applicable tax rate is around 10.6 per cent including both VAT and Service tax. Now, the customers will be taxed at 18 per cent in AC restaurants due to post GST effect.

For a non-AC restaurant in Mumbai, the existing tax rate will be levied at 6 per cent. From July 1 onwards, small eating outlets will be taxed at 12 per cent.

Telecom Bills : Post GST, 18 per cent tax will be levied on telecom services from the current service tax of 15 per cent. This will escalate your mobile and internet bills once GST comes into force. The industry which is already surmounted with pressure with the launch of Reliance Jio, is anticipated to pass on these charges to its customers.

Movie Tickets:  It was discussed during a GST Council meet in Srinagar that GST on cinema halls will be taxed at 28 per cent.

Presently, the service tax applicable on cinema and states carries their respective entertainment taxes. Maharashtra attracts more around 50 per cent entertainment tax on movie tickets. In Uttar Pradesh, entertainment tax is levied around 30-40 percent.

Nevertheless, the tax rate under GST will be lower as compared to the entertainment taxes applicable in some states, movie ticket prices in big multiplexed may observe the unchanged rate but the government plans to raise the tax rate on junk food and aerated drinks.

Medicines: GST rate will be levied on life-saving drugs and will be charged at 5 per cent for curing diseases like malaria, HIV-AIDS, tuberculosis, and diabetes which is estimated to have a marginal increase in its prices.

As of now, these drugs were excluded from excise and custom duties. However, a few states were levying 5 per cent tax on these drugs which will not be involved in GST. Under GST norms, there will be a 12 per cent on the constitution and 18 per cent on APIs(active pharmaceuticals components)-the bulk drugs that go into the processing of finalized products of pills and tablets.

Air Travel: Are you preparing to travel in an economy class? Wait until GST sets tax rate at 5 per cent from the existing 6 per cent, under the upcoming goods and services tax(GST) regime from July 1. It will help you to save on your fares instead proving costly.

However, if you are planning to travel business class, tickets will be costly for you as the tax will go up from 9 per cent to 12 per cent. So, you need to plan your trip accordingly.

No Tax Items : No taxation regime will be levied on daily items such as milk, paneer, and curd under the GST. Under the new GST norms, no taxation will be there on metro travel, religious travel and Haj Yatra.Also, no taxation will be imposed on healthcare and education sectors under the new taxation system. However, basic food items such as cereals, eggs, and meat will also come under no tax regime after the GST implementation.

Moreover, prices of food grains, particularly wheat and rice will fall down as they will be excluded from the GST. However, 5 percent taxation will be applicable on packaged food items.

Daily use Items: Household items like sugar, tea, coffee(excluding instant coffee) and edible oil will levy the lowest tax rate of 5 per cent, similar to the current tax structure.

A uniform national sales tax or GST Rates in India of 18 per cent will levy on common use products such as hair oil, soaps, and toothpaste instead of existing 22-24 per cent tax. The highest rate of 28 per cent under GST is also applicable on chewing gums, white chocolate, chocolates consisting of cocoa, wafers coated with chocolate, custard powder, instant coffee, students’ colours, varnishes, paints, perfumes, beauty products, sunscreen, shampoos, hair dyes, after-shave lotions, and deodorants.

Entertainment: Now visiting the theme park and sporting events such as IPL will levy a GST of 28 per cent as per the new indirect tax regime starting from July 1.

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