GST to a Common Man

[Ganeshan Kalyani]

Whether a common man is concerned about GST? The answer is No. A 'common man' for the purpose of this article is 'a consumer'. Whether the supplier is concerned about GST? The answer is No, because he does not pay GST from his pocket. He simply collects GST from their customers and pay it to the Govt.

If customer pays the tax, then the question arises is, why he is not concerned about it. The answer is bit psychological. A consumer has mainly two demands. First one is essentials like rice, dal, cooking oil, biscuits etc. He has to have these essentials. GST becomes secondary for him. GST on rice, dal, cooking oil of brand name is 5%,  and on biscuits it is 18%.

Second one is induced by his dream. He has dream to have a bike, a car etc. He want to have these assets to upgrade his lifestyle. He also want to provide a better environment to his family and therefore he purchase a house. The joy of having these assets is much more than the price he pays to the supplier to have them. So, GST becomes secondary for him. GST on bike and car is 28% + Cess on car ranging from 1% to 22%. GST on under construction house is 5%.

Another example of a common man not worrying about GST is tours and travels. A person plans for going on a holiday along with his family to a domestic or international location. He is emotionally focused on the happiness that he intend to give it to his family and for himself. GST becomes secondary for him. GST on tours and travels is 5%.

The common man was not concerned about taxes even before GST was implemented for the reasons stated above.

The supplier is concerned about the taxes they pay on their purchases. Their concern increases particularly when the final goods supplied by them is exempted from GST. The value of the exempted goods supplied to a customer has GST (paid on purchases) embedded into it. This is because when the goods is exempted the input tax credit is not allowed and as a reason the taxes settles into the cost of purchases and eventually into the value of sales.

Before GST there was Central Excise, Service Tax and Value Added Tax (VAT). Apart from Central Excise and VAT there were various other taxes like entry tax, octroi / local body tax, mandi tax etc. These taxes were forming part of cost of purchases as input credit to the supplier was restricted. The input tax credit claim was not seamlessly allowed. There was tax on tax. VAT Act was different in different States.

The rate of tax applicable on a particular product in one state was not same in another state. For e.g. if a product was taxable, say @6% in Maharashtra, the same product was taxable @ 14.5% in Tamil Nadu and the same product was exempted in the State of Himachal Pradesh. If a supplier happened to purchase raw material from another state then the difference in taxes had an impact on the selling price indirectly.

Even within the State there was different taxes. For example in Maharashtra,  Local Body Tax was applicable on the movement of goods from one municipal location to another. The rate of tax applicable on the entry of a particular product was different in each municipal location.

However, with the advent of GST, the suppliers are benefited as the supplier gets the input credit of the tax paid on their purchases without differentiation of manufacturer and traders, goods and service, interstate and intrastate etc. This has an impact on deciding the final price of the goods. Thus benefiting the common man.

GST Council is also responsive to the representations of the trade associations. Any changes in GST Law, rate of tax etc. is being brought in by the Council for the benefit of the business and the consumer.

It is seen that the common people are aware of GST. They have good idea about GST. They know the rate of GST applicable on a particular consumer product. This has become possible because of the common GST Law made applicable to all the States. The social media like whatsApp, twitter etc. has also helped spread the information on GST amongst people. These media pass the information of the Govt. to people at large. The Govt. has also conducted awareness campaign on GST.

Prior to GST, it was never heard or seen people talking about Central Excise, Service Tax, VAT, entry tax etc. so commonly. Now, in GST people talk about GST at all places may it be, at barber shop, vegetable market, hotel or while buying movie ticket. Now a day it has became common for a person to look into the bill after shopping especially to see GST charged on it. It is also seen people questioning on the rate of GST charged on a particular product by the supplier.  

The consumer eventually pay the tax. They must be benefited. In order to support them, the Govt. is carrying out frequent amendments in the GST law particularly to ease the business. If the business are subjected to less burdened of the tax, then the benefit that arises due to reduction in tax rate can be passed on to the consumer.

A common man would be tremendously benefited if the exempted goods are subjected to GST. If the supply of exempted goods are made taxable the corresponding input tax credit on purchases would become eligible to the supplier and accordingly the price of final goods may be revised to a lower side.