GST: Get ready to pay more, now that the celebrations are over

Will July 1, 2017 go down in our history as important a milestone as August 15, 1947? Just as on August 14 midnight 70 years ago, the tryst with freedom had heralded a new dawn for all Indians, has the June 30 midnight ushered in a happy future for all of us? Narendra Modi, Arun Jaitley and the entire government apparatus echo this sentiment. But how does that sync with the reality?

In order to get a feel of the popular perception about the GST, one need not go very far. Let us just sample the news items published in the last few days in the mainstream newspapers – which are usually supportive of most government initiatives.

Well, the government has been claiming that most of the products in the GST regime will be cheaper compared to what existed in the pre-GST days. The question: why then was there such a big rush to buy electronic goods before July 1 deadline set in?

Electronic Goods

The Economic Times (June 28) wrote the following about the massive sale in the month of June: “It has certainly been a huge month with sales growing 80-90 percent over the same period last year, considering June is usually a month when consumer durable sales tend to dip…”

The ET then went on to explain the reason: “Televisions, refrigerators, air-conditioners, washing machines, kitchen devices and small appliances such as irons and vacuum cleaners are set to become costlier by 3 to 5 percent from July since these will fall in the 28 percent GST bracket, thereby increasing the tax load.”

How did the GST bring in good omen if people queued up in front of the electronic stores to make as much purchases as possible before the ‘one commodity, one tax’ system set in on July 1?

Take a look at another news item in the same day’s Business Standard (June 28). It reads: “High tax rates on sports goods under the incoming Goods and Services Tax (GST) might discourage many youngsters, particularly those from poor backgrounds, from taking up sports …”

The news report then went on to explain: “Essential sports and fitness goods such as shoes, skipping ropes and yoga mats will join the ranks of luxury goods after the GST rollout on July 1. The tax on these goods will be levied at the rate of 28 percent , the highest rate under the new tax regime.”

The news item goes on further to say: “Shot puts, javelins, high-jump poles, boxing gloves and all gymnastic equipment as well as swimming gear are also set to be taxed at 28 percent. The tax rate in most cases will jump from an average of 4-5 percent at present to 28 percent (under the GST).”

A jump from 4-5 percent to 28 percent tax on basic sports goods – does that bring in good omen to the people, especially the youth of the country?

Tyres & rural India

A similar scenario was depicted by Business Line newspaper of the same day: “Bracketing animal drawn cart tyres along with those used in luxury vehicles and fixing a Goods and Services Tax (GST) of 28 percent is unfair and will ruin the backbone of the rural logistics system, say tyre dealers.”

The report said that the rural logistic dealers have given a ‘mercy’ plea to the government saying that 28 percent tax on rural animal drawn cart vehicles (ADV) tyres and tubes against the existing 5 percent value added tax would break their backbone but the government has chosen to show no mercy to those asking it to be fair to rural India.

The disabled

After rural India, let us take a look at the plight of the disabled with the onset of the GST. Javed Abidi, Global Chair of Disabled People’s International, who helped set up the National Centre for Promotion of Employment for Disabled People (NCPEDP) wrote in The Hindu (29th June): “… at the midnight hour, when the new Goods and Services (GST) regime kicks in, almost all aids and appliances that disabled people use such as a wheelchair, or a Braille typewriter or a hearing aid will become at least 5 percent more expensive… and some orthopaedic appliances such as crutches and surgical belts will get 12 percent more expensive.”

Even the modified cars adapted for use by the physically disabled persons have been taxed at the rate of 18 percent. Abidi writes: “Since 2006, these items were not taxed ! So, even 5 percent GST, let alone 12 percent or 18 percent, will make life that much more difficult for persons with disabilities.”

Abidi makes another important point: “It is not clear why the GST Council is taxing disabled citizens of India. While items such as kajal are being taxed at zero percent and rough precious and semi-precious stones are being taxed at a mere 0.25 percent, most disability goods are being charged at 5 percent – the same as kites (patang), and agarbattis (incense sticks) and cashew nuts.

This decision of the Council blatantly violates the provisions of the newly passed Rights of Persons with Disabilities (RPWD) Act, 2016…”. Abidi quotes the specific provision of the Act that clearly states: “The appropriate government shall develop schemes\programmes to promote the personal mobility of persons with disabilities at affordable cost.”

Unfortunately, the GST Act makes the condition of the disabled people worse by making their mobility increasingly unaffordable.

What does it tell us? The urban India and its so-called middle class, the rural India, the youth, the disabled – all have been adversely affected by the onset of the GST.

Houses to cost more

And the government is relentlessly adding to the misery of the people day after day. The June 30 edition of The Indian Express reports: “The government on Thursday hiked the GST rate for the construction sector to 18 percent from 12 percent. Construction of complexes, buildings, civil structures, including a complex or building intended for sale to a buyer, wholly or partly, will attract a GST rate of 18 percent.”

A Times Of India chart on June 30 tells us how much more an average consumer will shell out, post-GST, on EMI on home loan, on consumer durables, on medicine, on insurance, mobile and internet bill.

These are a mere sample. If we take into account the whole gamut of issues that the mainstream newspapers have flagged in the last one month about the miseries that the GST would usher in, then we can safely conclude that the GST regime – post midnight – would turn out to be a millstone, rather than a boon, to an overwhelmingly large number of citizens of India.