Cabs, Phones & More: 10 Things That Are Cheaper After GST

We have great news for travellers as implementation of GST is set to reduce hotel rates. Hotels with tariffs below INR 1,000 have been exempted from GST while those in the INR 1,000 – 2,500 range will incur only 12% tax incidence. Currently the hotels are taxed at 22% and post GST they are expected to be under the 18% tax bracket.

More reasons to travel or what?

Eating out at small restaurants will now be cheaper as they have been placed in the 5% tax bracket under the new GST rates. VAT, Service Tax and Luxury Tax combine to go up to 20-27% but will now come down to a single tax which is likely to be 18%. A single tax-structured bill should save up to 10-15% on the overall bill.

Make weekend plans to eat out already, please.

Silk and jute will be exempt from taxes but cotton and natural fibre will be taxed at 5%, man-made fibres at 18%, and apparel costing below INR 1,000 will be taxed at 5%. A reduced GST rate of 5% will be levied on footwear below INR 500 while the rest would come in the 18% bracket.

A host of items such as milk, honey, curd, atta, fruits and vegetables, jaggery, foodgrains and cereals have been exempted from levies {previously taxed between 1-5%}. Also, processed food items will now come under the lowest 5% tax bracket.

Soaps, hair oil, detergent, kajal, tissue paper and toothpaste which were previously taxed at 24-28% will now fall in the 18% tax bracket.

With lower manufacturing costs, the prices of certain types of entry-level cars are expected to drop significantly. Two-wheelers with engine capacity below 350 cc, SUVs and three-wheeler commercial vehicles will now be cheaper.

The current rate of tax on cab rides is 6% which will be reduced to 5% post GST. We know it’s a marginal difference but whatever makes getting to office, college and other places cheaper is a difference worth mentioning nonetheless.

The prices of geysers, static converters {UPS} and electric transformers will now be lowered. GST will also remove the VAT applied on mobile phones making them cheaper and more equally priced in all states. The current tax rate levied on them is more than 13.5%, while the proposed GST rate is 12%.

Fancy a new iPhone 7, anyone?

While the tax rate on business class tickets{12%} has been increased, the airfares for economy class travel are expected to go down as these tickets have been placed in the lowest 5% tax bracket under GST. With the reduction in the prices of hotels and airfares, we’ve already started dreaming about that long overdue vacay.

Oh, the places we’ll go!

The GST on coal has been brought down to 5% from the current tax incidence of 11.69%. As a result, electricity generation will be cheaper and you can expect lowered power tariffs.

Now, that’s a substantial decline we have to rejoice about!