GST has brought the uniformity in tax structure, which makes the taxation procedures easy and simple as it brought ‘one nation one tax’. The effect of GST slightly differs from industry to industry as different industries have different impact by it.
For example :- As in earlier tax regime the clothing industry was exempt from all types of taxes, but now in GST the clothing industry has been brought under its ambit, so it has its own positive and negative impact. There are also many sectors and items in different industries which are exempted from the GST, as per their need and necessity.
Impact of Budget 2019-2020 on GST Registered Person
Here are some items which are exempt from the GST:-
* Animal feed
* Aquatic feed
* Betel leaves
* Bread
* Butter milk
* Children’s’ picture, drawing or colouring books
* Coconuts
* Contraceptives
* Curd
* Earthen pot and clay lamps
* Educational services
* Eggs
* Fire wood
* Fish
* Fresh fruits
* Fresh milk
* Fresh vegetables
* Gandhi topi
Big Impact of GST on Textile Sector
* Hand operated agriculture equipments
* Hearing aids
* Human blood
* Human hair
* Indian national flag
* Indigenous handmade musical instruments
* Jaggery
* Judicial, Nonjudicial stamp papers, Court fee stamps
* Khadi yarn
* Kumkum, Bindi, Sindur
* Lassi
* Live animals
* Live trees and plants
* Medical services
* Municipal waste, sewage sludge, clinical waste
* Non-alcoholic Toddy, Neera
* Oraganic manure
* Pappad
* Plastic bangles
* Poultry feed & cattle feed
* Prasad (sacred food)
* Printed books, including Braille books and newspaper, periodicals & journals
* Puffed rice (muri)
* Puja samagri
* Raw jute
* Raw silk
* Raw wool
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* Salt
* Semen
* Slates, Slate pencils and chalk sticks
* Tender coconut water
* Unbranded atta (flour) and maida
* Unbranded besan (gram flour)
* Unbranded natural honey
* Unpacked foodgrains (Cereals, pulses)
* Unpacked paneer
* Water (other than aerated, mineral, purified)
* Wood charcoal
GST amount -A common man pays per day
These above items are mainly containing the food items and the items which are needed on daily basis and also consumed by each and every segment of the society, whether they are rich, poor or middle class. The exemption for these items make them a bit cheaper so that each and every section of the society can have access to these basic items.
Here are some sectors which are not affected by the GST :-
Education Sector :-
The education is the basic need that is required by each and every section of the society. To promote the education the government exempted the educational services so that everyone should be educated and contribute to make a better nation.
Taxation of Education Sector under GST Regime
Health and Medical Sector :-
The health and medical sector includes all the medical services and the health treatment services. These all services are exempted from GST due to which the burden on the pockets of the people is reduced. Also the health and medical services are very necessary for the people, so by the exemption there is easy access for the people for the medical and health services.
Full coverage of GST in Healthcare Sector
Social Welfare Sector:-
This sector includes all the donations and the funds for the social welfare. These donations and funds are used to help the needy, poor and the weaker sections of the society. To promote this sector government has exempted it from GST, so that more and more donations and funds are collected from NGOs and religious places and put them into some good and social work.
Food Sector :-
This sector includes the raw foods like cereals, pulses, flour etc. The food items are exempt from GST as food is the basic need that is required every day and every time. Also food is considered as the basic essential of life, due to why the raw food items are kept out of GST so that there are less burden on the pockets of the people.
GST effect on Fast Moving Consumer Goods (FMCG) Sector
Here are 3 goods and services that are kept outside the purview of GST :-
Alcohol
Alcohol for human consumption has been kept outside the GST. The taxes on alcohol for human consumption will continue as per the before taxation regime, as all taxes like VAT, sales tax, excise duty etc are being charged on alcohol. Also, the alcohol is consider as the ‘social evil’ , which means the consumption of alcohol is harmful.
Reason :-
The reason is that the demand for the alcohol is highly inelastic (rise in price will not change the demand), which means the sales of alcohol doesn’t affect. So the more and more tax can be collected by the state government on alcohol.
GST effect on Fast Moving Consumer Goods (FMCG) Sector
Petroleum
Petroleum products such as petroleum crude, motor spirit(petrol), high speed diesel, natural gas and aviation turbine fuel etc are kept outside the purview of GST. The taxes on these petroleum products will continue as per the before taxation regime, as all taxes like VAT, sales tax, excise duty are being charged on these petroleum products.
Reason :-
The reason is same that is the demand for these petroleum products is highly inelastic (rise in price will not change the demand), which means the sales of these products doesn’t get affect. So more and more tax can be collected through the alcohol.
Export of Goods and Services under GST Regime
Electricity
Electricity has been kept outside the purview of GST. The taxes on the electricity will continue as per the before taxation regime.
Reason :-
Under GST regime, the power generators are not paying GST as output tax. However, inputs are being taxed under GST. Therefore, they are not being able to claim tax credits, resulting in higher cost of electricity production. So, with the motive of providing low rates electricity the electricity is kept outside GST.
Conclusion :-
The government has set the rates under GST keeping in mind its objective of social welfare. It has carefully decided on the items that are included in the negative list of GST and has kept few items outside the ambit of GST. Efforts have been put by the government to keep the maximum of the necessity items under the negative list. This has primarily helped the common man in keeping its budget pocket friendly and will help in the long term development of this country.
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The author of above article is Sameer Batra, BBA Professional.
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