The Goods and Services Tax (GST), implemented in India on July 1, 2017, has significantly reformed the country’s taxation system. By subsuming various indirect taxes under a single umbrella, GST has brought about notable changes in the pricing and consumption of goods and services. This blog explores how GST impacts day-to-day services for consumers and businesses alike.
Understanding the evolution of service tax in India is crucial. Since its inception in 1994, service tax has undergone multiple revisions, starting from a modest 5% on three services to encompassing a wide range of services with a tax rate of 15% by 2016. This historical context helps us appreciate the comprehensive nature of GST as a tax reform.
To gain deeper insights, we conducted a survey titled ‘Impact of GST on Day-to-Day Life,’ gathering feedback on how GST has influenced daily activities, spending habits, and overall quality of life. This data aims to provide valuable insights into the real-world effects of GST, informing policymakers, business leaders, and individuals alike.
This blog explores how GST impacts day-to-day services for consumers and businesses alike.
1. Food and Dining
Restaurants and Eateries:
- Pre-GST Era: Restaurants were subjected to multiple taxes, including VAT, service tax, and excise duty.
- Post-GST Era: GST introduced a more straightforward tax structure. Restaurants now charge a GST rate of 5% for non-AC restaurants and 18% for air-conditioned ones, including both food and beverages. While the initial implementation led to some price adjustments, the overall impact has been a streamlined billing process.
Home Delivery Services:
- The GST on food delivery services is 18%. This has led to a slight increase in the cost of ordering food online, affecting frequent consumers of such services.
2. Healthcare
Medicines and Medical Services:
- Essential drugs and healthcare services are either exempt from GST or taxed at a lower rate of 5%. This ensures that critical healthcare remains affordable for the masses.
3. Transportation
- Public Transport: Public transport services such as buses and metro trains are exempt from GST, making daily commuting affordable for the general public.
- Cab Services: Services like Ola and Uber are subject to an 18% GST rate, which has led to a slight increase in fares. This impacts regular users who rely on cab services for their daily commute.
4. Telecommunications
- Pre-GST Era: Telecom services were taxed at around 15% under the service tax regime.
- Post-GST Era: The GST rate for telecom services is 18%, leading to a marginal increase in the cost of mobile and internet services. Consumers may experience a higher monthly bill for their phone and internet usage.
5. Banking and Financial Services
- Banking services, insurance premiums, and mutual funds are subject to an 18% GST. This has increased the cost of financial transactions, account maintenance, and other banking services. Consumers now pay slightly more for banking services, insurance policies, and investment products.
6. Entertainment and Leisure
Movie Tickets:
- Pre-GST Era: Movie tickets were subjected to different taxes based on the state, leading to varied pricing.
- Post-GST Era: GST has standardized the tax rates for movie tickets, set at 12% for tickets priced below ₹100 and 18% for tickets above ₹100. This has led to a more uniform pricing structure across the country, although it has also resulted in higher costs for moviegoers in some states.
Online Streaming Services:
- Services like Netflix, Amazon Prime, and Hotstar are subject to 18% GST, increasing the subscription costs for consumers.
7. Education
- Educational services provided by government-recognized institutions are exempt from GST. However, private coaching centers and vocational training institutes are subject to GST at 18%, impacting the affordability of supplementary education for students.
Read More
- How to Get GST Number: A Step-by-Step Guide
- Online GST Registration – Features ,Benefits and Process
Conclusion
The implementation of GST has profoundly impacted various day-to-day services. While it has simplified the tax structure and increased transparency, it has also led to price adjustments in many sectors. Both consumers and businesses have had to adapt, balancing the benefits of a streamlined tax system with higher costs in certain areas.
Understanding the nuances of GST is crucial for making informed decisions about consumption and expenditure. As GST continues to evolve, staying updated with the latest changes will help navigate its impact on daily services effectively. Ultimately, GST aims to demystify the complexity of taxes, eliminate price disparities, and create a fairer system for everyone across the country.
