GST 2.0: Now on consumers to spend

The price cuts under the commodity and services tax (GST) enter into force from today, and most companies have already announced discounts in the prices of products, which not only range from cars and electronics, but also in the elements of daily use such as milk, biscuits and shampoo. More companies are expected to announce price cuts. It is now up to consumers to take advantage of price cuts and pride, at least in the holiday season.

In his speech to the nation on September 21, Prime Minister Narendra Modi described the GST Bachat UTSAV and said that the exemption in the income tax and the exemption in GST together would provide more than 2.5 rupees for the people.

In its 56th meeting, the Commodity and Services Tax Council reduced 453 commodities with approximately 295 moving to 5 % or 0 % of the previous 12 %. Likewise, taxes are now imposed on many goods by 18 % instead of the previous average of 28 %.

The traders and durable companies have already seen higher inquiries and expect to see more reservations and purchases during Navratri, then in weeks before Diwali, which is usually the time for large ticket purchases.

Regardless of these purchases for one time, families are expected to spend less on the basics due to tax cuts, which may give them space either to eliminate more on estimated elements or improve their savings. Many services, including SPAS, salons, gyms and yoga centers, in addition to Premia insurance are much cheaper due to a reduction in the commodity, services and exemption tax rate.

A recent report issued by Crisil Ratses indicated that new commodity and services tax rates will benefit 11 out of 30 elements of consumption and a third of the intermediate monthly consumer expenses. These include the 11 basic elements such as dairy products and estimated products such as cars and cosmetics, and commodities such as processed foods that have witnessed an increase in demand during the past few years. “These elements represent 28 % of the rural MPCE and 26 % MPCE in urban areas,” he said.

Surab Agarawal, the tax partner, EY India, said that the rationalization of prices is a direct and meaningful boost for each Indian family. Take, for example, someone gets 50,000 rupees per month, spends about 25,000 rupees on the daily basics of food to personal care to medical bills. From this, the commodity tax rate discounts can affect about 15,000 rupees, which helps to save about 1,275 rupees per month. “This effectively represents an increase of approximately 2.55 % in its available monthly income. This is the large additional money that is placed directly in the hands of the ordinary man,” he indicated.

To ensure that companies convey the benefit of price cuts to consumers, the Ministry of Consumer Affairs also enabled the GST grievance on the national consumer aid line while the Central Council for Taxes and Indirect Customs monitors the prices of 54 commodities over the next six months.