Ready for GST? Here are changes that can stump you right after midnight
At midnight on June 30, Prime Minister Narendra Modi will formally usher in the country’s new Goods and Services Tax (GST). First proposed in 2006, the GST will subsume more than a dozen state and central levies into one tax, unifying this country of 29 diverse states and 1.28 billion people into a single market for the first time.
GST will certainly impact your life in more ways than you can imagine. However, initially the impact will be more visible in certain sectors.
Below are the areas where you will feel the GST impact immediately:
If you enter a restaurant around 11 pm tonight, and leave after midnight, the bill will include the GST levy instead of service tax. This means a higher headline rate compared to the current service tax of 6% (after discounting for taxes on food) and VAT. The Centre, however, insists actual incidence will not be higher. Service charge levied by hotels will be a constant.
If you pick a cab late hours on Friday evening and pay for it after midnight, that is early Saturday, you’ll pay GST instead of VAT as the new era of taxation will have kicked in.
Levies on hotel bills settled any time after July 1, even if you checked in days before, will change. GST will replace service tax and local taxes such as luxury tax. But if you booked and paid in advance for your hotel stay in July, you won’t have to pay GST despite the change in tax regime.
Bargain hunters should lock their orders for goods whose prices are expected to go up due to GST by Friday midnight. At midnight, the new tax regime could change the billing. The government has decided not to insist on Amazon and Flipkart deducting taxes in making payments to vendors, sparing them a complication.
If you are flying economy midnight, expect a cheaper ticket. Economy-class air travel will be cheaper, as the current tax rate of 6% rate will be replaced by 5%. Business class fliers need to book before the clock hits 12, their tickets will be taxed at 12% instead of the present 9%. On international routes, direct flights will be costlier than flights with stopovers.
Mobile bill payments
You need to pay your bill before 12 am today. Why ? Cell phone users will have to shell out an extra Rs 30 if their monthly phone bill is Rs 1,000, as the tax rate on telecom services will go up from existing 15 per cent to 18 per cent. Likewise, effective talk time for prepaid customers will reduce. For instance, effective talk time on a Rs 100 prepaid voucher will marginally dip to Rs 82 from Rs 85.