In the Name of Allah, the Most Gracious, the Most Merciful
Asalaamalaikum(Peace be on you),
The title might have quite a few of you confused.
On the other hand, any Indian reading this must have rolled their eyes, ‘Why is GST everywhere!’, you may have sighed.
Now, before either of you stop reading further and regard this as an irrelevant or boring post, give me a fair chance to explain this post.
To those who have absolutely no clue, Goods and Service Tax abbreviated to GST is the new tax system dramatically enforced in India, from July 1 at the stroke of midnight.
There was much hullabaloo surrounding the three lettered word from much before with everyone anxious and confused, and with everyone already forming their judgement on the same.
But, why have I after 15 days of it’s implementation, brought GST to the table now?
Because, even now there are so many premonitions surrounding GST and given that it is an integral part of our day to day lives, it is essential that we are not fooled or blinded with rumors or hearsay talks.
The first most rampant belief running around is that GST has liberally increased the prices of ALL goods and services.
So, bringing clarity to that, yes, the prices of certain commodities have gone higher but branding GST sinister for ruining lives just yet with only this view in mind is unfair on our part.
I will talk about this in layman’s words, so that, anyone reading this with no prior financial knowledge but with mere logic can make sense of things.
GST isn’t something novel being introduced to India, it is well part of developed countries such as Japan from as long as 1989, the structure may not be the same, but the main motive is same.
To bring one umbrella for all taxes.
Prior to GST, we had about 12 or more different taxes(Service, Luxury, Octori etc) with GST there are 3 taxes:
- CGST – Central Goods and Service Tax
- SGST – State Goods and Service Tax
- IGST – Inter State Goods and Service Tax
Further, the amount of tax charged is a four-tier tax structure of 5%, 12%, 18% and 28%.
Each tier has different goods under it such as,
Nil rate (0%): No tax on items like fish chicken, eggs, milk, fresh meat, curd, butter milk, natural honey, fresh fruits and vegetables etc.
5%: Cream, branded paneer, skimmed milk powder, fish fillet, frozen vegetables, coffee, tea, spices etc will attract 5% tax.
12%: Butter, cheese, ghee, frozen meat products, animal fat, sausage, fruit juices, dry fruits in packaged form, Ayurvedic medicines, AC hotels etc
18%: Pasta, refined sugar, cornflakes, cakes, jams, sauces, soups, ice cream, mineral water, telecom services, IT services, branded garments etc.
28%: Chewing gum, molasses, waffles, chocolate, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles etc
This is not an exhaustive list, just a jest of how the distribution has been made.
So, why is there a rise in the price and you are feeling a pinch?
For instance, when we earlier dined at an AC restaurant the total tax would be 11%( 5% VAT and 6% Service Tax) but now the rate charged is 18%, which is higher almost 7% higher.
When we look at goods, which are traded fro and to all parts of the country, earlier every state had different tax rates leading to accumulated burden on the consumer, but under GST, anywhere in India you pay the same rate of tax on a particular commodity.
So, some goods and services which earlier did not have a higher rate, have to now face the brunt yet you see our legislative representatives brimming with pride on establishing GST, why?
In their defense (you can skip the above chart if it puzzles you), the over all tax burden on a consumer has been reduced.
Now, moving ahead from a nation’s perspective, by introducing GST we have made our trade conditions favorable than before.
So, things have been made slightly simpler but at the cost of certain goods and services.
I don’t know if this was beneficial, since all of this is already been in the papers since June, but I decided to write this anyway.
And to ensure balance to my blog, here’s the most amazing Arabic kebabs grilled to perfection which are coyly hid under a layer of fries, and the one salad (Saltah – we call it) platter which can bring a smile to the faces of many, all the way from Madina.
The place is called Akawi Grill in Madina Al Munawarrah, and honestly has one of the finest grill I have had.
The picture does absolutely no justice to the bliss these are on the palate.
I hope you have an amazing week ahead!
Please do remember me in your Duas!
Until Next Time!