GST Impact on a Common man

Since the time discussions on GST had begun, all the more focus has shifted towards the business community. The common man or the consumer who shall ultimately bear the GST is not even thought for. The law which is expected to get enforced from 01.04.2017 will impact the pocket of the common man to a large extent.

Without going into the anomalies’ of the law, if we simply put it, goods are going to become cheaper and services dearer. This means one has to pay less if he/she cooks food at home rather than preferring a restaurant in his/her locality. It has been proposed that the GST would have four rates i.e. 5%, 12%, 18% and 28%. The essential commodities will be charged at the rate of 5% whereas the FMCG products to be charged at 28%. The luxury items including the cars shall be chargeable at 28%. On comparing the present tax regime the common man has to shell out less money to buy his day to day needs. But on the other hand, with service sector becoming costly it would certainly put a restraint upon him.

If the service sector which makes the huge contribution to Indian GDP goes out of the reach of the common man, it is likely that we may witness a shift of Indian Industry from service to manufacturing activities. This is a positive sign as this would increase our GDP, Exports, Cheaper and Good Quality Products. The ones who shall be left in the service sector would be professionals, online service industry, insurance, health care services etc.

Having said that the service sector would become dearer, it is also expected that the commercial training and education/healthcare/insurance and other essential services will also become costly. In such a scenario, where the common man requires all such services without any choice, the government should make separate schedule for such services and provide an abatement/exemption when these services are served directly to the consumer. Another possibility is to provide world class facilities through government agencies itself. But looking at the second largest population of the world in India it become very difficult to provide these services at cheaper rates bundled with convenience. In such a scenario the government should try to motivate the private sector in essential services sector in order to ensure its outreach to large number of people.

Since E-commerce has successfully connected with a common man, their prices have to remain competitive in order to compete with a traditional business concern. With more profits a local dealer would be in a situation to provide better facilities as compared to an e-commerce unit.  Also with government aiming to make India cash less economy, it would be great to see how a local dukandaar will be able to match an e-commerce unit where the customer can pay through debit/credit cards/ online banking/e-wallets etc.

If we have to conclude our argument, a smart consumer will certainly gain from GST if he makes his decisions judiciously after analyzing the various prospective of GST.  

by:

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Keshav R Garg

(B.Com, CA, CS, ISA(ICAI))

Faculty for GST: Indirect Tax Committee of ICAI

Author: Bharat's GST Ready Reckoner

            A Handbook on GST

Adviser for GST: Industries Association of Chandigarh 

Member: Indirect Tax Committee of CII, PHDCCI, MyGst.MyTax Foundation

Address: 3328, Sector 27 D, Chandigarh, India - 160 019

Phones: +91-172-461-3328, +91-98880-90008

Mails: mygst.mytax@gmail.com, keshavgarg@kdai.in