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How will GST affect your household budget?
Posted on: 30/Jun/2017 2:53:00 PM
How will GST impact your household budget? This is one of the most widely asked questions in the recent days. There are a few components that will primarily get affected due to GST. Spending on food, clothes, EMI, rentals, education, fuel and other future planning, are some of the factors falling under your household budget. It is likely that the GST will have its impact on these in some way or the other. Few takeaways are as follows:
GST vs inflation:
You may be bothered by the inflation, as you plan your household budget. What is inflation? It is the rate at which cost of living gets increased and thus play a vital role in your budget planning and long-term financial plan. In most other economics, GST has been inflationary. Clear examples of this are Australia and Malaysia where inflation shot up during the implantation period.
What helps you relieve from this stress is that the government has tried to keep all its food products of the range 0 to 5 percent of GST, and the common use toiletries are kept of the range 18 percent. There is thus no negative impact on the household budget. When there are significant changes in the household budgets, it will lead to huge political and social implications and the government may be reluctant to making such moves.
Services like telecom services are getting more expensive. However, there will be more substantial impact on household budget, provided there is not much allocation towards high-end products in your monthly budget. These products will attract more tax under GST and you will observe the prices getting increased. If you are perhaps buying apparels for rate under Rs 10,000, you will get the benefit of concessional rate of GST.
What are the items that will get impacted by the GST?
In household budget, there are both gainers as well as losers. For instance, the popular food items will be of 0 to 5 percent range. This will have the food inflation at low rate, as it is clear in the recent months. Apart from GST, with the good monsoon, food prices are to remain tepid throughout the year. It is unlikely for the food budget to increase. In fact, chances are that it would go down.
Your lifestyle bills will see a hike after GST. Air or train travel rates will increase. There will be higher rate for traveling in premium class as compared to economy class. The monthly mobile bill or DTH bill are to get costlier as they will absorb 15 to 18 percent tax. There are however freebies and discounts offered by many telecom services.
