New Delhi, July 21: First the bad news — your monthly telephone bills, for mobiles as well as landlines, will rise if the new GST regime is implemented. Other services, which include DTH, credit card bills, insurance premiums. will also get expensive. On the flip side however, a lot of things will become cheaper including automobiles, household electrical appliances and articles of daily use such as soaps and oil.
“The effective duty rate on most goods is 25-30 per cent so a GST rate of 20 per cent should bring down prices,” says Mr Uday Pimprikar, partner, E&Y.
“For instance, the average effective duty on cars works out to 30-32 per cent across India, against the proposed rate of 20 per cent,” he adds.
Other areas where prices could fall include household appliances and white goods, where the duty rates range from 22-26 per cent. A lower tax rate on these goods means that prices will fall if the reduced rate is passed on to consumers.
Moreover, the GST rate is also supposed to fall over the next few years — to 18 per cent in FY13 and 16 per cent in FY14. This would mean a further reduction in prices. Some items however, such as computers are taxed at a lower rate — and prices may rise.
However, the glad tidings will be limited to physical goods. Most of the services, which includes telecom, entertainment, financial services may become more expensive. Currently, the Centre imposes a service tax of 10 per cent and states don’t have the power to impose service tax. The new proposal will mean that the service tax will rise by six per cent. “It will incr-ease the prices of all services which are used by the consumers,” said KPMG, director, Mr Pratik Jain.