Has GST Made Your Life More Expensive or Less? An analysis

The Goods and Services Tax (GST) entered the taxation landscape in India with high hopes and a bit of scepticism. It was supposed to be a tax system that promised to make things easier. No more tangled mess of taxes; just a simple, unified approach. Businesses and regular folks like us were excited about the prospect of less confusion. But where do we find ourselves, half a dozen years later? Let's figure out if this tax superhero has lightened or loaded the wallets of middle-class Indians. 

Pre-GST Prices vs. Post-GST Prices: Groceries

Before the introduction of GST in July 2017, essential groceries faced a complex tax structure that often led to higher consumer prices. Post-GST, the goal was to streamline these taxes and reduce the overall tax burden. Let's explore the data –

Rice (1 kg)

• Pre-GST Tax Rate (2016): 5% VAT

• Post-GST Tax Rate (2023): 5% GST 

Analysis: While the tax rates remained the same, the unified GST structure might have contributed to price stability, preventing a significant increase. 

Pulses (1 kg) 

• Pre-GST Tax Rate (2016): 5% VAT

• Post-GST Tax Rate (2023): 5% GST

Analysis: The transition to GST maintained a 5% tax rate, with a marginal impact on pulse prices, suggesting stability in taxation. 

Cooking Oil (1 litre)

• Pre-GST Tax Rate (2016): 12.5% VAT

• Post-GST Tax Rate (2023): 5% GST

Analysis: The shift to a lower GST rate likely contributed to a reduction in cooking oil prices, aligning with the tax structure change. 

Pre-GST Prices vs. Post-GST Prices: Clothing and Apparel 

The textile and apparel sector experienced a transformation in taxation with the implementation of GST, influencing the prices of clothing items – 

T-Shirts 

• Pre-GST Tax Rate (2016): 7.5% VAT

• Post-GST Tax Rate (2023): 5% GST

Analysis: The lower GST rate led to reduced prices for T-shirts, showcasing the positive impact of simplified taxation. 

Formal Shirts 

• Pre-GST Tax Rate (2016): 7.5% VAT

• Post-GST Tax Rate (2023): 12% GST

Analysis: The shift to GST increased the tax rate, contributing to a slight rise in formal shirt prices. 

Jeans

• Pre-GST Tax Rate (2016): 10% VAT

• Post-GST Tax Rate (2023): 5% GST

Analysis: The lower GST rate positively influenced jeans prices, aligning with the intended benefit for consumers.  

Pre-GST Prices vs. Post-GST Prices: Electronics and Gadgets

The electronics sector underwent significant tax changes post-GST, affecting the prices of gadgets and devices – 

Smartphones

• Pre-GST Tax Rate (2016): 13.5% VAT + 2% CST

• Post-GST Tax Rate (2023): 18% GST

Analysis: The shift to GST led to a higher tax rate for smartphones, but competitive market forces might have contributed to price reductions. 

Laptops

• Pre-GST Tax Rate (2016): 12.5% VAT + 2% CST

• Post-GST Tax Rate (2023): 18% GST

Analysis: The increased GST rate for laptops might have influenced prices, considering factors like input tax credits and market competition. 

LED TV (42 inches)

• Pre-GST Tax Rate (2016): 12.5% VAT + 2% CST

• Post-GST Tax Rate (2023): 18% GST

Analysis: The transition to GST increased the tax rate for LED TVs, and market dynamics likely played a role in price adjustments.  

Pre-GST Prices vs. Post-GST Prices: Dining Out and Entertainment

The realm of services, particularly dining out and entertainment, witnessed significant changes in taxation under GST – 

Dining Out (Average Restaurant Bill)

• Pre-GST Tax Rate (2016): 15% Service Tax

• Post-GST Tax Rate (2023): 18% GST

Analysis: The shift to GST increased the tax burden on dining out, potentially impacting overall expenses for the middle class. 

Movie Tickets (Single Screen)

• Pre-GST Tax Rate (2016): 15% Entertainment Tax

• Post-GST Tax Rate (2023): 18% GST 

Analysis: The uniform GST rate for entertainment led to a slight increase in movie ticket prices, although regional variations may exist.  

Pre-GST Prices vs. Post-GST Prices: Real Estate and Housing

The real estate sector underwent a transformative journey with the implementation of GST, influencing housing prices – 

Property Sale (2BHK Apartment) 

• Pre-GST Tax Rate (2016): 4.5% Service Tax + Stamp Duty

• Post-GST Tax Rate (2023): 5% GST + Stamp Duty

Analysis: While the GST rate for property remained lower, additional costs like stamp duty might have influenced housing prices. 

Rental Housing (Monthly Rent)

• Pre-GST Tax Rate (2016): No GST

• Post-GST Tax Rate (2023): No GST

Analysis: Rental housing remained unaffected by GST, providing relief to tenants. 

Impact on Businesses: Before and After GST

The business landscape underwent a seismic shift with the introduction of GST, altering the taxation dynamics for enterprises – 

Taxation for Businesses

• Composite Tax Rate (2016): VAT (varied by state) + Central Excise + Service Tax

• Unified GST (2023): 18% GST 

Analysis: The unified GST system streamlined taxation for businesses, offering input tax credits and simplifying compliance, potentially fostering a more conducive environment for economic growth. 

The analysis suggests that while some items experienced price stability or reduction, others faced marginal increases, highlighting the nuanced impact of this fiscal transformation on everyday life. 

Moreover, the transition reflects a more efficient and business-friendly taxation framework. For example, GST has streamlined the borrowing costs for a business with a standard 18% tax levied on processing fees and no direct influence on interest rates. So, whether you are facing a financial crunch in your business or want to scale it up further, a Business Loan is the answer to all your needs. On Bajaj Markets, you can get additional funds of up to ₹30 Lakhs by choosing this ideal financing solution.