Lower tax load comes as a pleasant surprise

With the dawn of GST regime on Saturday morning, consumers who were handed out bills with the new tax head when they went to shop generally had something to smile as they shelled down one or two% less on commodities of common usage.

The consumers exchanged their bills at cafes and restaurants with their friends over social media to know if they were rightly charged.

Most of the consumers were happy that the service tax component in the bills which was earlier six % was eliminated.

With VAT of 14.5%, service tax of 6 % and in some cases levy of various types of cess, consumers shelled out 20.5% plus for most items manufactured within Telangana. But, they were charged at 18 % tax on Saturday with 9% as Central GST and 9% as State GST.

Outside commodities

For commodities coming from other States, earlier there was a Central Excise of 12.5%, VAT of 14.5% and Central Sales Tax of two %, aggregating to 29%. Now, it was only 28% minus excise duty and CST in GST.

Principal Revenue Secretary Somesh Kumar has warned traders that the additional one % benefit should be passed on to consumers with logistics in place and benefit of input tax credit.

Tax base

He, however, expected the tax base of the State government to grow in a couple of months despite marginal reduction in rates.

He said the reduction was much higher in luxury sector and asked traders to put up boards that the rates had come down in GST.

The qualitative change in tax rates was warmly welcomed at the official launch of GST at the headquarters of a trade body at Red Hills here on Saturday.