GST making you anxious? Here is a fact-check on how new tax will impact you

The shelf prices of most commodities are likely to see a change over the next few weeks

GST is finally here! It has caught the nation’s fancy, which is somewhat unprecedented for a change in the tax regime.

Income Tax Efiling - However, despite all the efforts made by the government to demystify GST, people continue to be anxious (and confused) about whether GST will be a game-changer for every household in India. My aim is to give a thumbnail sketch of the potential after-effects of GST, and hopefully alleviate this anxiety or confusion a bit!

From consumers’ perspective, pricing will probably be the most important parameter for evaluating the success (or otherwise!) of this mega reform. On this front, GST could turn out to be a mixed bag in the short run. The shelf prices of most commodities (and not necessarily their MRP) is likely to see a change over the next few weeks. Income Tax. And while some products such as soap, toothpaste and hair oil are likely to be cheaper, others, including aerated beverages and some consumer durables, could be more expensive. So if you see the same product with a different MRP tag at a store, don’t doubt the integrity of the retailer or the quality of the product – it’s the GST effect!

Retailers may have a tough time convincing consumers about prices. So some dope on GST on standees or pamphlets should come in handy.

There is also the psychological aspect of this transition for people. As consumers, we are used to seeing only Value added tax (generally between 5% to 15%) on our bills for products we buy. What we don’t see are the other hidden taxes such as Excise Duty and numerous other tax components, which are embedded in the prices of products. Going forward, when retailers print 18% or 28% (or even 40% GST in some cases) on invoices, it may hurt consumers’ sentiments, and may even adversely affect the perceived value of the products in their minds.

So, rather than blindly succumbing to the myth that taxes have increased substantially under GST, do try to appreciate the fact that even before GST, the ‘visible’ VAT (along with all the ‘hidden’ taxes in products’ prices) could add up to or exceed the new ‘transparent’ GST rate! Remember, what is important is to stay focused on the total prices of products (including taxes) to make a rational comparison between then and now.

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