Cheaper Or Costlier? How GST May Impact Prices Of Goods

GST or goods and services tax changed the indirect tax landscape of the country from July 1 by subsuming over a dozen of state and central taxes. Since GST is meant to eliminate "tax on tax", experts say overall tax burden on goods is expected to fall over time. Many essential goods such as unpacked food grains, gur, milk, eggs and salt won't attract any tax under GST. Some services will get costlier as banking and financial services have been put in the 18 per cent rate slab under GST, from 15 per cent earlier.

"However, going forward, it is expected that due to reduced cost because of availability of GST credit on items hitherto not available, the price of services will also come down which will benefit the consumers," says Sandeep Sehgal, director-tax and regulatory at Ashok Maheshwary & Associates LLP.

After GST rollout, many items like footwear below Rs 500 and garments could become cheaper. On the other hand, items like TV and small cars could become costlier.

Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of GST as of now. The GST Council will take a decision on it at a later date. Alcohol has also been kept out of GST.

Here is the list of goods, their current effective tax rates and respective GST rates under the new tax system, according to professional services firm EY:

Items	Earlier Rate (%)	GST (%)
Perfume	17.5 - 27	18
Cosmetics		28
Cheese	5-14.5	12
Butter		12
Glucometers	11-20.5	12
Tableware - Metal	11	18
		Revised 12% for spoons, forks, ladles, skimmers, cake servers, fish knives, tongs
Tableware - Ceramic	17.5	18
Tableware - Wood		18 and 28
Tableware - Plastic		18
Kitchenware - Metal	11-20.5	18
		Revised 12% for Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs
Kitchenware-Ceramic	17.5 - 27	18
Kitchenware-Wood		18 and 28
Kitchenware-Plastic		18
Kitchenware-Fly ash		18
X-Ray Apparatus (for medical, dental & veterinary)	17.5-27	12
X-Ray Apparatus		28
Footwear (below Rs. 500)	14.41	5
Footwear(above Rs. 500)	14.41	18
Readymade garments (below Rs. 1000)	5-6	5
Readymade garments (above Rs. 1000)	18.5	12
Biscuits( Less than Rs. 100/kg)	11.89	18
Biscuits(Above Rs. 100/kg)	16.09	18
Corn-flakes	9.86	18
Wrist watch	20.64	28
Jam	5.66	18
Baby food (sold in unit containers)	7.06	18
Small Cars (<4m <1200 cc petrol)	25-27	28+1 (cess)
Small Cars (<4m <1500 cc diesel)	25-27	28+3 (cess)
Mid-segment (<1500 cc)	36-40	28+15 (cess)
Cars with 1500 cc & larger engines	41.5-44.5	28+15 (cess)
Vehicles for transport with 10 to 13 passenger capacity (cannot be considered as bus)	39-41	28+15
Motorcycles	25-35	28
Motorcycles Engine >350	25-35	28+3 (cess)
Television	25-27	28
Stationery (Plastics)	11-27	18
Stationery (Paper)		12 and 18
		Rates revised on following items from 18% to 12% - Exercise books and note books
Stationery (Pen/Fountain Pen)
		Rates revised on following items from 18% to 12% - Eraser
Renewable energy devices	17-18	5
Iron Ore	17-18	5
Digital Cameras	25-27	28
Luxury items like yacht	25-27	28+3 (cess)
Music Instruments (Handmade)	0-12.5	0
Music Instruments (Other than Handmade)	25-27	28

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Notes from EY:
-These are illustration purposes only, not meant for direct implementation or reliance
-These rates are based on the best of our understanding of the applicable rates and should not be taken as an assurance of ultimate rates.
-Information as of June 20.
-EY assumes no responsibility to update for changes in after the date of the submission.