2018-05-23 02:48:46 GST Center English Discover some goods and services that have increased in price under the new GST regime. Review how the price of banking services, telecom... https://d3hrajprm8dqcv.cloudfront.net/wp-content/uploads/2018/05/23024813/customers-look-at-cost-of-goods-with-GST.jpg Goods Cost GST Which Goods Cost More Under the GST?

Which Goods Cost More Under the GST?

2 min read

The GST regime brought in a host of changes. Overall, the prices of most goods and services went down, but a few prices went up. Throughout the process, the GST council heard numerous arguments from business owners and consumers, and due to these pleas, the council moved many items from high tax slabs into lower slabs. But at the end of it all, some items still ended up with higher prices.

Mobile Phones

The prices of mobile phones made by foreign manufacturers went up. Some of the price increase was due to the 12% GST on mobile phones, in spite of consumer outcry that the rate should only be 5%. But the increase was not strictly related to the GST. The council also levied a 10% customs duty on imported mobile phones and electronic parts, and that also increased the price. To stay competitive, Apple dropped its prices by 7%.

Broadband and Mobile Bills

In addition to higher prices on many mobile phones, consumers also pay more to use their phones since the implementation of the GST. Telecom services are one of the services that moved from the 15% category to the 18% tax slab. The GST council eliminated the 15% slab when creating the GST system. Most items went down to the 12% slab, but some services including mobile and broadband got sorted into the 18% slab. That caused a 3% increase in most consumers’ bills.

Consumer Electronics and Other Luxuries

Televisions, refrigerators, air conditioners, and washing machines along with several other goods, face a 28% GST. Luckily, in spite of being in the top tax slab, the prices of these products didn’t increase by that much. When you take into account all the taxes that were subsumed or eliminated by the GST, the price increase was only about 2.5%. This means that if an appliance cost ₹17,000 under the old system, it costs about ₹17,425 under the GST system. That’s the old price plus an extra 2.5%.

Chocolates, soda, and beauty products are also in the top tax slab, so their prices increased as well. But again, some manufacturers decided to absorb the tax. For instance, many bath soaps increased their weight by 30% but kept their prices at the same level.

Financial Services and Insurance Plans

The GST doesn’t just affect material goods. It also applies to a number of services, and costs for financial services also increased. For loan fees, leases, and other banking services, the GST jumped from 15 to 18%. For example, under the old system, if you took out an ATM withdrawal after passing your free transaction limit, you faced a fee of ₹20. Once the service tax was applied, the fee jumped up to ₹23. With the 18% GST, the total service fee and tax became ₹23.60.

Insurance costs also went up under the new system. Consumers with life, health, or general insurance paid an extra 3% in GST on their premiums. Again that’s due to a shift from the 15 to the 18% rate, which increased prices by ₹3 for every ₹100.

The GST system was designed to lower taxes, level the playing field for interstate transactions, and simplify reporting requirements. But as explained above, it also increased prices on some goods or services. To help you keep track of the changes as well as any upcoming updates, you may want to look into apps and software such as QuickBooks.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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