GST rate hikes have led to a big political storm as the opposition is up in arms. Recently 47th GST council meeting was chaired by the union finance minister with state finance ministers and approved the interim report of the group of ministers(GOM) on rate rationalization. GST hikes are for revenue Or starvation: read to know more about it.

What is Goods and services tax-

It’s an indirect tax for the whole nation applied in the supply of goods and services right from the manufacturer to the consumer.

• In India GST council was established by the 101st constitutional amendment in 2016.
• In India rate for various goods &services is divided into 4 slabs :they are 5%,12%, 18%, 28%.

What has happened?

Goods & services range from pre-packed unbranded food items, certain pickles and lassi, cheques, cuts, and polished diamonds, LED lamps, pencil sharpeners, printing, drawing, etc., will face higher GST from 18th July 2022.

Effects of GST hikes?

Low-income group people who were already facing inflation will now come to the brink of starvation, and the middle class would come below the poverty level. Many things which were exempted from the tax will also be included in the tax net like milk, curd, and dairy products which are highly consumed by households, so increasing inflation will make the situation worsen in rural areas.

Shashi Tharoor on GST hikes commented on paneer, butter, and masala rate. He tweeted that how we will calculate the Math over Paneer, Masala, and Butter.

Reasons for GST hikes from the government

• Some companies were seen to be misusing the provision of exempting unlabelled food items by not registering them.
• GST council over the years, reduced several tax rates, resulting in the lowering of the average rate to about 11.5% from the REVENUE -the NEUTRAL rate of 15%

Which gets dearer after GST hikes?

(Under 5% GST

• Packaged food items like flour, milk, curd, and paneer.
• Cereals and pulses.
• Unpackaged items, including rice and wheat when packaged.
• NON-ICU rooms cost more than 5000/day.

UNDER 12% GST

• Hotels rooms with a tariff of up to 1000/day.
• Solar water heaters.

• Hotels rooms with a tariff of up to 1000/day.
• Solar water heaters.
• Stationery items like maps and charts, including an atlas.
• Finished goods like leather products.
• Items sold on tetra products.

UNDER 18% GST

• Printing, writing, and drawing ink.
• Drawing instruments like paper, knives, pencil sharpeners, and blades.
• LED lights will also be expensive
• Fees charged by banks for the issue of cheques (loose or in the book from).
• The rate on machines for cleaning, sorting, or grading seed hiked from 5% to 18%.
• Machinery used in mills or for the working of cereals, etc., goes up from 5% to 18%.
• Services, such as work contracts for roads, bridges, railways, metro, and crematoriums.

what gets cheaper after revised GST rates

• Renting of trucks, and goods carriage where the cost of fuel is included
• Electric vehicles will now come under the 5%slab from 12%.
• a tax on ostomy appliances comes down to 5% from 12%.

Way forward

GST council should rethink its decision because it will affect millions of people directly. This is something to think about one side GST on polished diamonds increased from 0.5% to 1.5%, which will not affect the higher income group, but on another side, tax on daily household things like milk, curd, buttermilk, etc., imposed from 0 to 5%, that will affect the life of million households.