What is GST?
GST Hike 2022
New Rates and Applicable Commodities
What is GST?
GST stands for Goods and Services Tax. It is an indirect tax that precedes over various other indirect taxes in India, including excise duty, VAT, and services tax. The Goods and Services Tax Act was enacted by Parliament on March 29, 2017 and went into effect on July 1, 2017.
In other words, the Goods and Services Tax (GST) is charged on the provision of goods and services. The Goods and Services Tax Law in India is a multi-stage, destination-based tax applied on every value addition. GST is a single domestic indirect tax law that is applicable throughout the Indian subcontinent.
GST Hike 2022
As the new year begins, some GST adjustments that will take effect on January 1, 2022, will have a substantial impact on the average person’s budget.
Several items will now have an increased GST charge to them, including ATM withdrawals, Credit and Debit card usage, GST Return Rules, Purchasing Cars from certain manufacturers, Online transport bookings via apps like Ola and Uber, Ordering food online via platforms like Swiggy and Zomato, and various other textiles and footwear. Putting a huge constraint on the common mans’ budget.
Both the federal and state governments are facing income issues as a result of increased expenditure demands and the economic impact of the second wave of the Covid-19 epidemic that happened during the first half of the present financial year.
This tax rise would help the Centre, which is facing a revenue shortfall due to recent fuel duty cuts, by stabilising tax collections and freeing up funding for social programmes. It would also keep states from falling down a fiscal cliff when the federal government’s GST compensation runs out in June of next year.
GST - New Rates and Applicable Commodities
The following changes were made to this years’ GST rules:
Customers would be charged Rs 21 plus taxes in order to withdraw cash from banks.
Goods like clothes, textiles, and footwear tax rates have increased from 5% to 12%, a complete increase of 7%.
5% GST to be charged on platforms like Ola and Uber.
5% GST to be charged on platforms like Swiggy and Zomato.
Automobile companies to increase the prices of certain car brands and models.
New rules for payments through credit and debit cards.
India Post Payments Bank (IPPB) would have to pay fees for withdrawals and deposits that exceed a certain threshold.
Other rules were also implemented along with the ones mentioned above, including rules regarding bank lockers amongst others.
Other GST information
A few side-effects of these recently founded GST rules are as follows:
This would effect around 85% of the industry and nearly 80% of final products.
The anticipated GST hike will result in the loss of over 15 lakh employment in primary and secondary industries.
Because the unorganised sector accounts for more than 80% of fabric manufacturing in the nation, increasing the GST on textiles to 12% will be detrimental to power loom and handloom weavers.
Because of significant price rises in raw materials like as yarn, packing materials, and freight, the market is expected to see a 15-20% increase in garment prices in the near future. The shopkeepers bemoan the fact that people who buy clothes for less than Rs 1,000 would be the worst hit.
Cloth vendors reported that the Covid-19 epidemic has impacted market activity for the past two years, but that it is gradually recovering owing to a decline in new cases in recent weeks. They had high aspirations for the year 2022, but those were dashed by the aforesaid statement.
The incremental revenue may be minimal as well since many small firms that were in the informal sector before GST may revert to that status.