GST impact on common Man

The Goods and Service Tax (GST) launched in India in July 2017 was perhaps one of the biggest reforms since 1991, as well as one of the most talked about subjects. It is intended to bring in a “one nation one tax” concept. Its impact has been different for different stakeholders including manufacturers, retailers, distributors etc. Even while the economy was recovering from demonetization, GST which involved a major overhaul of the indirect tax regime not only impacted prices but also created a huge compliance burden on companies with the new set of regulations for tax returns and other documentation.

offered a huge incentive in the destocking period of June, and consumers happily took advantage of the attractive discounts. For the common man, GST has led to cost increase for several daily household items. Sometime in November, the GST council recommended a reduction in the rates for over 177 items that were falling in the highest tax bracket of 28% to 18% which brought some cheer. Manufacturers are expected to pass corresponding benefits in the form of reduced prices. In the case of real estate, the prices of under construction flats will be more expensive given the higher rate of GST versus the earlier VAT regime, however for apartments with completed certificate, this is not relevant. While price rises are a reality in several sectors, manufacturers are also not passing on the full benefit of input taxes to consumers. In the case of restaurants, since they are unable to claim input credit, either a price increase or taking a hit are the only options. Consumers now have recourse against arbitrary price hikes by from manufacturers under the Goods and Services Tax (GST) with the government now notifying the form for complaints to the National Anti-Profiteering Authority.

While a rating upgrade by Moody’s and signs of recovery spelt good news for the economy, the bad loans problem had its impact on lending activity of banks. Coupled with GST, last year saw some good and some not so good news for consumers.

Srividya Kannan
Founder, Director – Avaali Solutions Pvt Ltd.