IMPACT ON HOUSEHOLDS BUDGETS UNDER GST TAX RATES
Impact of GST rate on Domestic Appliances and Electrical machinery
The rate for each household electronic appliance like the fridge, washing machine, vacuum cleaner etc is fixed at the rate of 28% under GST. It is likely that the increase in the tax burden by 2-3% under GST would be passed on to the final consumer.Placement of the basic appliances such as fridge and washing machine under 28% slab shows that electronic appliances are still considered as a luxury by our government.
Manufacturers of such household electronic appliances like Samsung, Godrej, Voltas etc may not be able to provide any benefit of GST to the end consumer due to the tax rate of 28%. Clarifications are also required for the treatment of the current tax exemptions or deductions provided by the different states. Manufacturers in Mumbai would be the only one’s getting relief under GST as they are charged octroi at the rate of 5% after the other taxes( average 25-26%) on household electronic appliances.
Final GST Slab rates are :
- Zero rated items : Foodgrains used by common people. ( A sigh of relief…hmmm…)
- 5% Rate : Items of mass consumption including essential commodities will have low tax incidence.
- 12% and 18 % Rate : Two standard rates have been finalised as 12% and 18%.
- 28% Rate : White goods like Air conditioners,washing machines,refrigerators,soaps and shampoos etc.that were taxed at 30-31% shall be now taxed at 28%.
Services that are now taxed at 15% shall be taxed at a higher rate of GST @ 18%. Various goods have been classified to fit into the above categories.
It is infact too early to predict the actual impact of GST on different sectors.