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 take a cab late 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.
The stroke of midnight will matter if you are buying an air ticket. If you plan to fly economy, buy it after midnight. But if you are flying business class, book your ticket before midnight. GST will make economy-class air travel cheaper as the current tax rate of 6% rate will be replaced by 5%. Business class tickets will be taxed at 12% instead of the present 9%. And if you are taking a direct international flight, book it before midnight, for direct flights with stopovers.