Perplexed by the hubbub surrounding Goods and Services Tax (GST) in India? Wondering how it would affect your family back in India?
Well there is no need to sweat. WeÔÇÖll help you gain a good understanding of what GST implementation would mean to you and your family.
WhatÔÇÖs GST all about?
Welcomed as a great step by Team India, GST is all about ÔÇ£one country, one taxÔÇØ system. It is to replace more than a dozen indirect taxes at both centre and state level, while unifying the $2 trillion economy and 1.3 billion people into a single market. Implemented from 1 July 2017, this unified transparent tax system is for the bigger cause of transforming India into a corruption free strong economy, reducing black money and gaining significantly higher tax collections.
HSBC estimates that in the long run, this new GST reform will add about 40 basis points to India's economic growth. In fact this new implementation will help boost the ÔÇ£Make in IndiaÔÇØ campaign. There will be free flow of goods and services across states and union territories with no unnecessary checkpoints. This efficient neutralization of taxes will make our products more competitive in the international market and give a boost to Indian exports.
What are the types of GST collected?
Going forward, India will be levying 3 types of GST:
Who has to pay GST?
Manufacturers, sellers and service providers are the ones who will have to pay GST directly to the Indian Government. However as consumers, we will have to bear the tax amount while purchasing goods and services.
What does it mean to common people?
At the outset, the common man will experience some reduction and increase of prices here and there. ItÔÇÖs great news that several basic necessities are not taxed under GST. Food grains, cereals, pulses, milk, butter, curd, vegetable, salt, fish, and poultry products such as chicken and egg etc. are few items that will see a 0% tax levy on their non-branded counterparts. Hotels and lodges with tariff below Rs 1,000 will also have no tax.
All other items will be taxed under four main rate bands such as 5%, 12%, 18% and 28%, irrespective of the location of purchase. However gold and rough diamonds do not fall under the current rate slab and will be taxed at 3% and 0.25% respectively.
How it could affect NRI investments?
ÔÇ£The NRI investments in India are expected to touch $11.5 billion this yearÔÇØ, according to a report by Square Yards, an Indian real estate firm focussing on NRIs. Yes, the transparency in the tax regime is likely to attract more Foreign Direct Investment (FDI) and cause a boom in the real estate and gold market in India. The cost of properties may also come down due to this uniform taxation. If need be, NRIs may be able to claim the GST refund, thereby making their purchases in India cheaper.
Managing change is always a challenge, especially in a country with 29 diverse states, cultures and sentiments. Hence letÔÇÖs keep our fingers crossed and watch how the GST implementation unfolds!