After India shifted to the Goods and Services Tax (GST) regime on July 1, 2017, Indian households have been able to save an average of Rs 320 per month each on consumption of staples such as cereals, edible oil, sugar, snacks and sweets.
The note was prepared by the finance ministry to determine the impact of GST on households, according to a report by the Hindustan Times that attributed the information to an internal finance ministry source.
“GST has helped the common man by adding some more money in his monthly kitty. Direct taxes are paid by those who have a certain level of income, but indirect taxes are paid by every person. In pre-GST era, it was largely in the range of 21% to 33% or even more on various goods or services or commodities but with the GST regime, the indirect taxes were reduced on most of the essential goods and services,” the report quoted a government official as saying.
Further breaking down the benefit, the note explained that a household saves Rs 94 a month on the consumption of cereals such as rice and crop, which are now tax-freeas no GST is levied on them. Indirect taxes on cereals ranged from 2.5% to 2.75% before the introduction of GST.
Also, wheat, rice and flour attracted 2.5%, 2.75% and 3.5% tax, respectively, before July 2017. Tax rates on these essential items have been slashed to zero after the launch of the GST regime, the report added.
The note estimated average savings on edible oil at Rs15 per month per householdafter the GST regime reduced tax on the product from 6% to 5%. The tax rate on sugar was also reduced from 6% before July 2017 to 5% now, resulting in a saving of Rs 6 per month.
A saving of Rs 13 per month is estimated on salted snacks (namkeen) and sweets, while Rs 25 is saved on monthly household consumption of chocolates after the indirect tax rates were slashed for these products, the note said.
“In fact, impact of GST on rates of several products is more than the differences in levies between pre- and post- GST regime because (of) several other local taxes (which used to be levied under the old regime). Levies like entry tax and octroi had an impact of about 2% on the cost of products,” another official was quoted in the report.
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Source: News18