Impact of GST on the Prices of Goods and Services

Since GST bill has been introduced in the Parliament, economists across the country have started analyzing its impact on the economy. Recommended as the biggest reform of Indian economy, GST has a distinctive impact on every touch point from manufacturer and trader to buyer. Since it is about to proceed in the next couple of months, it is the time to analyze the impact of GST on a common man.

GST has been drafted to create a single window for indirect taxation which was incurred under various names until now. It is estimated to boost GDP by 2% in the short-term and will be a mix bag for the people. Many services may become expensive while goods may witness a fall in their prices due to GST. Though there is a mixed reaction from economists on implementation or transition phase, but everyone is sure that impact of GST will be positive in the longer term. But, everyone is concerned about its immediate impact. So, here we’ve analyzed the anticipated impact of GST on a common man’s lifestyle:

Services That May Become Costlier:

Under GST, these services may become expensive:

  • Healthcare
  • Residential Tenancy
  • Courier Expenses
  • School fees
  • Transport Communication

Some of the services might get less expensive. Prices of movie tickets may reduce due to impact of GST while dining at restaurant can become cheaper in the states where taxes are higher. Essential commodities and few vehicles can be cheaper.

Essential goods and commodities have been exempted or categorized in the low rates column. Also, it may bring down the cost of these products.

  • SUVs/ Luxury Vehicle/ Premium Car
  • Compact Sedan
  • Two Wheelers

Effect of GST on Consumer Durables

GST might have marginal impact on Consumer Durables. People can expect + or – 2 to 3% impact on these products.

  • Stoves
  • Washing Machine
  • Television


Impact of GST on Unhealthy Products

Unhealthy products or sin goods like aerated drinks, tobacco products and other such products have been categorized in a higher tax segment. Government has proposed tax around 40% on such goods, hence these may witness increase with the implementation of GST.

Apart from these factors, details are still awaited for many other categories of products and services. Government is categorizing various goods and services. Hence, it is difficult to measure their impact on common man. But, it is sure that GST will decrease the supply cost. This reduction of cost will bring benefit for the end users in the longer term.

About This Author

Experienced CA with a demonstrated history of working in the accounting industry. Strong business development professional skilled in Direct and Indirect Taxation, Startup Business, Insurance Regulatory Compliances, Business Planning, Internal Audit, Analytical Skills, and Account Reconciliation with Tax Planning

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  • Great Post CA AKN.
    I had lot of doubts regarding GST Impacts on businesses, but now I am very clear.
    Thanks alot for this post.
    Would like to read more.

    Nirbhay 10 months ago Reply

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