The Union Government of India has announced to roll out an indirect tax in form of the Goods and Services Tax (GST) for the entire nation from 01 July. This is going to bring about drastic changes in the country’s economy. By virtue of this legislation, a single tax will be levied upon the supply of goods and services from a manufacturer to a consumer. The way the GST has been designed, it ensures many unorganized sectors also come under the taxation net.
Significant tax reform in independent India
According to economists and finance experts, the rollout of the GST is one of the most significant tax reforms since 1947. Everything said and done, laymen and women are keen to know how this modern taxation system is going to affect them, their present and future. Keeping this in mind, our senior journalists conducted extensive research to understand how the proposed GST is going to impact the prices of IT products and services.
Impact on computers and computer peripherals
Topnotch finance gurus in the country opine that the prices of desktops, laptops and computer printers will go up once the GST is rolled out. This is because, the tax levied on laptops and printers – as proposed in the charter – will increase to a flat 18% from the existing range of 12% – 15%. Even peripheral products like LAN and data cables, computer printers, projectors and monitors will become dearer, as these will be taxed at 28%. At present, these products are charged with 17.5% tax, which can be further broken down into 12.5% countervailing duty and 5% VAT.
Even a 28% tax has been proposed on electronic products like photocopiers, facsimile machines and ink cartridges for computer printers. At present, 18% duty is charged on these products.
Request for revision
This steep rise in the cost of these products may affect the Digital India drive, recently undertaken by the Union Government. Thus, the computers and computer peripherals manufacturing industry has already requested for a 12% tax imposition on these products to facilitate the ongoing digital drive across the nation. Click here to go on Fix It Home Computer Repairs, check out how they managed to have prices below the increases that most have been subject to.
Effect on cameras, TV sets, speakers
The GST proposes a flat 18% tax on popular electronic goods like cameras (both point-and-shoot and DSLRs) TV sets, making the items more expensive than before. As such, retailers, dealing with this range of products, speculate the price rise will affect sales at least during the initial days after the Act gets implemented.
Electronic appliances and lifestyle products
The GST is going to hit the market of electronic lifestyle appliances as well. The economic reform is going to levy a 28% tax on products like refrigerators, washing machines, electric razors, dishwashers, water heaters, toasters, vacuum cleaners and such others. As a result, market insiders are of the opinion that the price of the range of lifestyle appliances is going to ascend in immediate future.
GST on telecom services
The GST proposes a hike of 3%, (from 15 to 18) on service charges in the telecom sector. Apparently, it is not a huge jump but the telcos are pretty much adverse to this proposal. After the entry of Reliance Jio last year, the Indian telecom industry has become unbelievably competitive. In this situation, Indian telcos are not willing to hike up the service charge and place an additional burden on consumers.
Presently, prepaid customers receive a talktime of INR 83.96 on an INR 100 topup. After the GST comes into effect, this will come down to INR 82.20. Similarly, for postpaid customers, the mobile charges will increase marginally. Prices across the Indian telecom industry are steadily coming down. A monthly plan that used to cost INR 700 now costs INR 499. In this backdrop, the slight increase in the cost will be ignored by many.
The GST has not only triggered a massive political debate for the statesmen and women but also raised a storm in teacups for ordinary folks. However, the industry is not much at ease with this proposed development.