GST has been the buzz word this week! Finally, the much-awaited Goods & Services Tax Bill (GST Bill) has been given a nod, which will pave the way for it to fulfil further protocol before it comes into effect, hopefully by the government's deadline of April 2017!

When it is rolled out, the GST is going to hvae a domino effect on the industry and consumers both.

Let's take a look on how GST will affect you:

Currently, any basic bill is made up of a value added tax (VAT), service tax, Swacch Bharat Cess, Krishi Kalyan cess, and lots more. The outflow of money under the pretext of indirect taxes is phenomenal right now. GST is aimed at getting all these taxes under one name and rate, to create a win-win situation both, for the Centre and state governments, and India Inc.

What is GST?

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The GST is a comprehensive tax system levied on goods and services at a national level. This system will collect the taxes at the consumption-level, where the consumers buy the goods and services from a retailer or a service provider. It will replace all the different kinds of indirect taxes with one single tax system. About 150 countries in the world already have GST in place.

How will GST affect the common man?

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The tax system in India is very complex right now and it makes it difficult for various businesses to comply with a cumulative tax structure. If GST can reduce the operating cost of these businesses, it will lead to lower taxes to be paid by the consumer at the end-level.

GST will change what we pay for most goods and services, since it will be applicable on nearly everything we consume. Currently, only alcohol and petroleum products have been kept out of the purview of the GST. Apart from that, the new GST rate which will be decided in the upcoming months, by the GST Council, will decide what we pay, going ahead.

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However, looking at the fundamentals and the current taxes in place, let me try and give you an idea about what you will be paying for essential goods and services, once GST is put into action.

What will be Expensive?

Eating Out

Yes, your restaurant bills and eating out bills are likely to go up once GST is rolled out. For example, if you were used to spending Rs 100 on eating out, then there is a service tax and VAT of 18.5%, on an average. So apart from the service charge, you would usually shell out Rs 118.50. It is expected that the GST rate will be fixed at about 18-20% which is higher than the 18.5% we spend cumulatively under different tax heads. So, be ready to pay more for outside food!

Say goodbye to cheap calling on mobile phones!

On your mobile bill, there is a service tax of 15% currently. This means, on every Rs 100 bill, you have to pay Rs 15 in taxes. If GST comes in at the expected 18-20%, then your mobile bills will go up.

Costlier Banking Insurance Clothes Jewellery Restaurant Bill Travelling Sporting events Ambulance Services Cultural Programmes Mobile calls Trucks Pilgrimages

Jewellery to become more expensive

If you are planning to buy jewellery, it will be advisable to buy it before the GST regime comes into place. This is because, currently, only a 2% effective tax passed on to the consumer but once the GST model is in place, at least 6% effective tax rates could be imposed, impacting your jewellery buys.

What will be cheaper?

Online Shopping

GST is expected to bring down the cost of logistics significantly, even making inter-state trade smoother because of a uniform tax rate. This will facilitate faster movement of goods across the country and help bring down costs for e-commerce companies. Overtime, e-commerce companies are expected to pass on the benefits of this to the end consumer.

Branded Clothes!

Excise duty and VAT will be subsumed under the GST. This will make branded clothes cheaper.

Cars

The automobile industry may be the biggest beneficiary of the GST. From making cost to spare parts, paint, logistics, the cost is likely to come down at every level of manufacturing and sale of a model. Right now, the prices are different across various states, this will also be done away with with GST.

Cheaper Building materials Acs Fans Mobile phones Paint Processed goods Cement Buying a house Movie tickets Two-wheelers Cars

LED TVs

Currently, there's a 24.5% tax on a Rs 20,000 LED TV. With the GST rate likely to be fixed at 18-20% band, you will shell out less for LED TVs and other gadgets.

Rishabh Parakh is a Chartered Accountant and the Chief Gardener & Founder Director of Money Plant Consulting, a leading Tax & Investment Planning Advisory Service Provider. He also runs a personal finance blog called “Mango Investor” aka AAM Niveshak at www.mangoinvestor.com . Readers are invited to send their feedback to rishabhparakh@moneyplantconsulting.net