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Home News Reports GST implementation enabled increased Household Savings as tax rates came down

GST implementation enabled increased Household Savings as tax rates came down

As per finance ministry reports, the implementation of Good and Services Tax (GST) has brought down the tax rates and enabled increased Household Savings for the customers. According to the analysis, an average consumer is now saving about Rs 320 monthly on the purchase of commonly used goods including cereals, edible oil and cosmetics post-GST implementation on an expenditure of Rs 8400.

According to the analysis, If a household spends Rs 8,400 a month post GST on 10 goods — cereals, edible oil, sugar, chocolates, namkeen and sweets, cosmetics and toiletries, washing powder, tiles, furniture and coir products and other household products — its monthly savings would be close to Rs 320, the finance ministry source claimed referring to the expenditure analysis. An analysis of the pre and post-GST implementation shows that the tax rates have come down on at least 83 consumer products such as hair oil, toothpaste, soap, washing powder and footwear.

Earlier, before GST, when a consumer spent Rs 8,400 on the daily use items, he/she had to pay Rs 830 taxes but after GST the tax charges have been reduced to Rs 510. The consumer saves effectively Rs 320 on consumption of daily needs goods worth Rs 8,400, as per finance ministry source. In the earlier tax framework, the central government would levy excise duty on a product manufactured in a factory and subsequently the state governments would impose VAT on top of this. This meant that the consumer not only paid VAT on the price of the product but also on the excise duty charged by the centre.

Implementation of GST resulted in uniform tax rates on goods and services and it also removed the tax-on-tax widespread in the previous system. In addition to this, lowered GST rates on a host of products have facilitated increased monthly savings for consumers. According to the government source, wheat and rice have been exempted from tax under GST against 2.5/2.7% tax incidence in the previous framework. Likewise, tax on milk powder is reduced by 1% from 6% to 5% post-GST. Sugar confectionery products were taxed at 21% in earlier tax regime but under GST they have been put under the tax slab of 18%.

The source asserted that there has been a marked reduction in tax rates on scores of goods including milk powder, curd, buttermilk, spices, wheat, rice, nutrition drinks like Horlicks/Bournvita, pasta, idli dosa batter and mineral water, as these products are taxed at a much lesser rate under the GST than previously. The tax rate on washing powder and tiles has come down to 18% from 28% earlier. On furniture goods, the earlier tax rate of 28% has been brought down to 5/18% slabs under GST.

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Staff reporter at OpIndia

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