What is likely to become more expensive as govt plans GST revision?
In a move that is likely to impact the prices of various goods and services, the Indian government is planning to revise the Goods and Services Tax (GST) system. According to a recent report by NDTV, a proposal is being considered to replace the expiring compensation cess with cesses on health and clean energy.
The proposed changes are likely to increase the prices of certain goods, including cigarettes, carbonated drinks, and high-end cars. In this blog post, we will delve into the details of the proposed changes and their potential impact on the prices of various goods and services.
Health Cess to target ‘sin goods’
Under the proposed changes, a Health Cess is likely to be imposed on “sin goods” such as cigarettes, pan masala, and other tobacco products. This cess is expected to be a percentage of the value of these products, which means that the prices of these goods are likely to increase.
Cigarettes, in particular, are expected to become more expensive. The government has been trying to reduce the consumption of cigarettes and other tobacco products in the country, and the imposition of a Health Cess is seen as a step in that direction.
Clean Energy Cess to target more expensive cars and coal
Another cess that is likely to be imposed is the Clean Energy Cess, which will target more expensive cars and coal. The cess will be a percentage of the value of these products, and the revenue generated will be used to promote clean energy and reduce the country’s dependence on fossil fuels.
The Clean Energy Cess is expected to impact the prices of luxury cars, which are already quite expensive. For example, a luxury car with a price tag of Rs. 1 crore could attract a Clean Energy Cess of Rs. 1-2 lakh, depending on the specifications of the car.
Coal, which is a major source of energy in the country, is also likely to be impacted by the Clean Energy Cess. The cess will be a percentage of the value of coal, and the revenue generated will be used to promote clean energy and reduce the country’s dependence on coal.
Middle-class GST relief
While the proposed changes are likely to increase the prices of certain goods and services, the government has also announced a GST relief for the middle class. The relief includes a reduction in the GST rate on certain goods and services, such as electricity, water, and education.
The government has also announced a proposal to exempt certain goods and services from GST, such as healthcare services and educational institutions. These exemptions are expected to benefit the middle class, who are already struggling to make ends meet.
Impact on the economy
The proposed changes to the GST system are likely to have a significant impact on the economy. The imposition of cesses on certain goods and services is expected to increase the prices of these goods and services, which could lead to a reduction in demand.
However, the government has also announced a proposal to reduce the GST rate on certain goods and services, which could lead to an increase in demand. The impact of the proposed changes on the economy will depend on various factors, including the overall economic situation and the response of consumers and businesses.
Conclusion
In conclusion, the proposed changes to the GST system are likely to have a significant impact on the prices of various goods and services. The imposition of cesses on certain goods and services, such as cigarettes and high-end cars, is expected to increase their prices, while the reduction in the GST rate on certain goods and services could lead to a decrease in their prices.
The government has also announced a proposal to exempt certain goods and services from GST, which could benefit the middle class. However, the impact of the proposed changes on the economy will depend on various factors, including the overall economic situation and the response of consumers and businesses.
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