The GST system takes off tomorrow. Prospective homebuyers are expected to make a move now with the uncertainty cleared.
Property investors too will benefit with the threshold limit for applicability of GST on rentals being raised to Rs 20 lakhs from Rs 10 lakhs. Anil Rego, an investment consultant, explains what GST entails for consumers and homebuyers
What does GST mean for consumers?
The Goods and Services Tax (GST) is one the most significant tax reforms for India.The GST Council has finalised the fitment of over 1,200 goods and 500 services in the four-tier tax bracket of five, 12, 18, and 28 percent under the GST regime. The GST will subsume 16 different taxes, including excise, VAT, service tax and entertainment tax.
While there could be some glitches during implementation, agility on the part of businesses and governments will hopefully smoothen the implementation of making the country a truly one-market. This means the economy stands to gain over the long term as efficiency gains and higher government revenues translate into higher growth potential.
Because GST will usher in a much more simplified tax structure in the country, and bring in cost efficiencies, consumers will be reap the re wards. The indirect tax cost on most goods is currently on the higher side due to numerous cascading of taxes. A combined effect of these taxes leads to an effective indirect tax rate of 25-30 percent sometimes in the hands of the customer.
As the standard rate of GST is 18 percent, most goods will benefit from this significant reduction. In the new regime, as much as 81 percent of household items fall below or in the 18 percent GST slab. In services, there are some that attract a higher tax such as insurance, mutual funds and banking transactions. There are some that have a lower tax rate now. Tax on entertainment, cable and DTH services will come down under the GST regime as the ‘entertainment tax’ levied by States has been subsumed in the GST.
Source : The Times of India (Bangalore)