One of the biggest tax reforms of independent India is around the corner. It is called GST and comes into effect on 1st July 2017. As a shopaholic, know the GST impact on your frequent shopping items.
With this new tax regime buzzing everywhere and it being a completely new concept for all of us, please read on below to understanding the basic concepts of GST and its effects on fashion clothing and accessories.
Goods & Services Tax is a multi-level, destination-based, single tax that will be imposed on every stage of a product lifecycle till it reaches the end customers.
This will replace almost 20 plus taxes such as service tax, central tax, excise tax, cess etc.
There are four tax slabs introduced with GST. Vegetables, Food grains and cereals have been zero-rated, while other rate slabs are 5%, 12%, 18% and 28%. At the end of the day, there won’t be a tax on tax with this GST.
This Game Changer will make the unorganised business model into a structured one in few months and thus will benefit the consumer.
Let’s check that out how GST will impact fashion and online shopping lovers:
With GST, Your online orders will reach you faster as the sellers don’t have to do paperwork at each state. Currently, retailers are filing paperwork at both product source state and destination state which will end with GST.
Prices may go down but there won’t be many discounts:
Prior to GST online shopping stores are not used to collect the tax, but now they will charge tax on the margin amount. Due to this, there may be some impact on the final price of the product.
Thus they may not put discounts to nullify this extra new tax.
GST impact on Free return policy:
E-commerce may strict the return and cancellation policy. With GST, 18% tax on returned products should be barred by online stores as they have already paid tax while collecting products from sellers.
So there will be GST impact on free return policy with online stores.
Check out how does the price vary with Pre GST and Post GST regime:
Any clothing or apparels costs under 1000/- will have 5% GST and above 1000/- will come under 12% tax slab
2. Foot Wear: Footwear with a retail price under 500/- fall under 5% taxation while rest will have 18% GST.
3. Soaps & Hair Oils: With GST, Hair Oils and Soaps becomes cheaper.
4. Wrist Watches: Watches fall under 28% tax slab and hence Wrist watches, pocket watches and stopwatches prices may raise.
5. Deodorants and Toothpaste: Toothpaste and Deodorants may get cheaper with GST.
6. Leather Bags: All the attractive leather products are taxed at 28%. Only Leather gloves specially designed for sports in taxed at 12% GST.
7. Caps and Hats: Caps and hats will be taxed at 18% which is less than Pre GST regime.
Apart from these, GST impact on many more items like two wheelers, dining out, televisions, stoves, movie tickets which will come down.
This transparent tax will benefit people as prices will come down which in turn will help companies as consumption of products increase.
Do you have more suggestions or questions about GST? Please post your valuable comments below.
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Note: The prices mentioned may vary and are roughly calculated with tax slab for better understanding.
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