On Thursday, the government crossed a major hurdle as the Goods and Services Tax (GST) council finalized four slabs- 5%, 12%, 18% and 28%- at which various goods will be taxed across the country.
Although the new indirect tax regime will be revenue neutral both for the centre and the states, different tax slabs will mean that the prices of products across the board will change.
The government has not officially announced the commodity-wise classification, which will determine the slab under which each commodity will fall, but information already available in the public domain helps us piece together a broad picture on what might become cheaper and what might pinch the common man’s pocket more.
We know, for instance, that at least half the items that make up the consumer price basket, which determines retail inflation, will not attract any GST. These include food-grains, wheat and rice.
Data compiled by consulting firm EY suggest that products such as tea and jam, which are likely to attract GST at 5%, could become cheaper by up to 1%. Other commodities that could cost less include cornflakes and mobile phones, which may see their prices go down by up to 5%.
While items like footwear could become dearer by 0.2%, others like bicycles and bathing soaps could see an uptick by up to 1.6%. Assorted items such as pens and bottled water and white goods like LED TVs and split air conditioners could also become costlier.
There is no word yet on the rate at which services will be taxed, but indications are that they will come under the 18% slab. This, will make them dearer as most services are presently taxed at 15%.
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