GST or Goods and Services Tax is the most significant tax reform that has been introduced in India in the 21st century. Since its enforcement, there has been a massive simplification in the taxation system, and many loopholes have vanished.
The impact of GST on the Indian economy has been quite noticeable. Businesses are much more manageable, and credits are provided to regular taxpayers. Online mode of payments is allowed to avoid the cumbersome manual procedures, as well as the advancements in the IT sector, have been combined with GST to provide a more effective and efficient portal for the common man.
But this is all surficial. If one digs into the soil deep enough, one shall find that the real impact of GST on the Indian economy lies in between the lines. There are advantages of GST like better services to taxpayers, removal of tax-on-tax, etc. But the main objective of lowering the prices and increasing the manufacturing of products is now a far-off milestone.
Table of Contents
The various commodities and services provided have been categorized into five different slabs, called tax slabs or GST rate schedule for goods and services, which tells how much tax shall be applicable to any product or service. These are:
The goods and services under this slab are exempted from the GST tax. These are the necessary items that fulfill the basic requirements of any human.
Some of the goods under this slab are Poultry products, dairy products, fresh fruits and vegetables, stationary, specific food items like common salt/wheat/pulses, contraceptives, etc.
Some of the services under this slab are Education, Healthcare, Hotel services under Rs. 1,000.
Under this slab, the goods and services have 5% of their price as tax. For example, if a commodity costs Rs. 1,000, and the GST rate is 5%, then the tax would be 5% of 1,000, which is Rs. 50.
Some of the goods under this slab are Frozen vegetables, beverages, apparel, which are below Rs. 1,000. Footwear, which is below Rs. 500, solar panels, fuel (kerosene/LPG/coal), etc.
Some of the services under this slab are economy air class travel, railways, cab services like Ola and Uber.
The third slab, as per the GST rate schedule for goods and services, is the 12% one.
Some of the goods under this slab are Packaged dry fruits, apparel which is above Rs. 1,000, personal hygiene, ayurvedic medicines, cell phones, etc.
Some of the services under this slab are business air class travels, non-ac hotels.
Under this slab, the commodities and services are charged 18% of their cost as tax.
Some of the goods under this slab are ice creams, preserved vegetables, mineral water, branded garments, iron and steel products, man-made fiber, yarn, etc.
Some of the services under this slab are financial, and IT services, telecom, AC restaurants and five or above rated hotels, etc.
Under this slab, the commodities and services are charged 28% of their cost as tax.
Some of the goods under this slab are chocolates, aerated water, white products, speakers, cameras, fireworks, etc.
Some of the services under this slab are Movie tickets above Rs. 100, racecourse betting, etc.
According to the GST rate schedule for goods and services, some products fall out of these five defined tax-slabs, like jewelry, precious, and semi-precious stones.
Let us first compare the scenario before GST came in with after. Different states used to have their taxation systems. The reason being the ability of any state to manufacture a product based on its resourcefulness and specialty. Due of this, the system was quite balanced and loyal to its production. But the impact of GST on the Indian economy has been such that it took away the privilege of a state’s culture and resources and made it equivalent to other states. The tax rates before GST were different for every state, but GST has standardized everything.
Although there is a glimmering, positive side to this topic, too, it is not much in the financial terms. Yes, GST has removed double taxes, it has eased the payment modes, much time is being saved by providing alternatives to manual procedures, but are all these benefits worth it? Ask any economic expert, and you will realize that the scale of the negative impact of GST on the Indian economy is way too massive. Urgent calls on this issue need to be made to save the nation from the horrifying hold of a failed economy.
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