AFTEREFFECTS OF GST: HOW HAS GST AFFECTED THE MARKET AND THE CONSUMER

It’s been more than a week since the GST was rolled out. It has consistently been hailed as one of the biggest tax reforms since independence and has affected every part sector of the economy  in one way or the other.While some of the businesses are being benefitted on account of reduced tax expenses and easier transition of goods across state, the effect of GST has not been uniform in the economy. There are also some businesses which are incurring increased taxes even on the inventory purchased before the GST was implemented. Consequently, they are forced to sell the products at the same price, but are absorbing the higher tax costs.

Following are few sectors which have been affected post GST.

BENEFICIARIES 

One of the most benefitted business segments under the GST is the logistics. The removal of check posts has reduced the costs of transportation of the goods across the country. Moreover, the compliance cost is also expected to come down as the entire formal process will shift online. This will further smoothen the movement of goods from one state to another without incommodious paperwork.

Besides the logistics, entertainment avenues like cinema halls and theme parks are also among the other beneficiaries of the GST as the effective tax on them is now lower than the combined tax proportion they used to pay earlier. As a result of this the consumer’s bill has come down and at the same time it has also initiated the hope of increase in business opportunities in future.

Besides this, small businesses having turnover not more than Rs. 75 lakhs have been facilitated to register under the composition scheme under which they are required to file  the returns once in a quarter and would be liable to pay a rebated rate of interest. As a result compliance cost and working capital position of these businesses would definitely improve.

SUFFERERS

However, the GST is not a panacea for all and small businesses would have to bear the brunt of the new regime as under the current regime exemption limit has been reduced from Rs 1.5 crore per year to Rs 20 lakh per year. Similarly, textiles industry has also been suffering from the burden of high tax.

Besides this, the services placed under the highest tax slab of 28%, along with other charges, have also witnessed inflated bills. 

EFFECT ON CONSUMERS

Under the new regime, the tax burden of the consumers on certain necessary items of daily use would definitely come down. While some of the food items like unpackaged rice, wheat, Fresh milk and pasteurized milk etc have been placed in the 0% tax slab, other items like tea and coffee have been placed in 5% GST bracket. This would consequently reduce some burden of the households and, at the same time, would drop the family budget to some extent. According to dome experts post GST, a household kitchen would be able to save around Rs. 5000 per year. However, there are also some Goods and services like clothings, luxury cars and some other luxury services which are expected to cost more than the pre-GST regime and might cause a hole in the consumer’s pocket.