Economists predicted that the GST (Goods and Services Tax) Council’s decision to reduce the tax on certain goods and increase tax rates on others would increase inflation, reduce household expenditure, and encourage people to buy branded goods.
Furthermore, they warned, because the majority of these commodities make up a sizable portion of the lower-middle-income group’s consumption basket, the burden may fall disproportionately on them.
The GST Council agreed to end the tax exemption for a number of unbranded and pre-packaged food goods, including agricultural and dairy products, at the recent meeting in Chandigarh.
A 5 percent GST rate would now apply to packaged goods such milk, curd, dried leguminous vegetables, makhana, wheat or meslin flour, jaggery, puffed rice, organic food, manure, and compost.
In addition, it imposed a GST of 18% on bank costs for issuing checks and a tax of 12% on hotel rooms that cost less than 1,000 per day, which is now free from taxation. On July 18, the modifications became official.
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Devendra Kumar Pant, chief economist at India Ratings and Research, however, said that it will be challenging to estimate the effect on the consumer price index because some of these things, like electric cars, are not included in the basket of the CPI that is now in use, which goes back to 2011–2012.
The Council agreed that all electric cars, battery-equipped or not, will be entitled to a 5 percent reduced GST rate. The GST Council is currently reportedly seeking the opinions of states for raising rates on 143 products, despite the fact that the prices of important commodities in India are already under upward pressure.
Handbags, chocolates, chewing gum, garments & clothing accessories made of leather, perfumes/deodorants, walnuts, and other items are among those for which GST rates may rise.
Some other items like custard powder, watches, papad, suitcases, gur (jaggery), handbags, perfumes/deodorants, power banks, colour TV sets (under 32 inches), chocolates, ceramic sinks, washbasins, chewing gum, walnuts, goggles, spectacle frames, non-alcoholic beverages, and clothing and clothing accessories made of leather are also likely to see a hike in their prices.
Products like papad and gur (jaggery) may be moved from the 0% to the 5% GST bracket. According to the article by the Indian Express, the GST rate for walnuts may increase from 5% to 12%, from 5% to 18% for custard powder, and from 12% to 18% for wooden tables and kitchenware.
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Feature Image designed by Saudamini Seth
Sources: News 18, Livemint, Financial Express
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This post is tagged under: cost of living, government, GST, GST rates, increased price, india, inflation
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