Impact of GST on middle class

Goods and Services Tax or GST, as it is known by its abbreviation, is a new tax system which got regulated from 1st July 2017. It is a measure to replace all the different taxes that were in practice before with a single tax system. Earlier, the tax system comprised of various charges from central as well as the state government which has got limited to GST. The idea behind enforcing GST was one nation one tax. Whether it has turned out to be that beneficiary is a subject of concern.

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To understand how exactly has GST affected the various class and especially the middle class, we first need to understand the changes it has brought along by drawing a demarcation line between the old and the new tax system.

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GST has brought all the taxable items under four slabs of tax percentage i.e. 5%, 12%, 18%, 28%. The common man, or the middle class, is more concerned with the necessities of daily living such as the food, clothing and shelter. As long as the prices of them are dipping, it will be a win-win situation for the middle class. But reality begs to differ. For instance, preserved vegetables have come under 18% slab which was down to zero before. Butter, ghee, cheese have gone up from 6 to 12. Similarly, there has been a rise in other consumer goods too.

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In kitchenware and appliances, there has been a considerable increase in the stoves and electric hotplates. Construction items such as wallpaper, paints & varnishes, putty, wall fillings, plaster, ceramic tiles have all gone up. Then in the lifestyle and home items, items such as cell phones, furniture, refrigerators, air conditioners, wristwatches have all seen a rise in their prices as an impact of GST.

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There is also a different side to the story just like there are two sides of the same coin. There are many goods whose prices have gone down in the wake of the GST. For instance; tea, coffee, frozen vegetables, vegetable fats and oils, soups, soap, hair oil, milk beverages have all seen marginal or considerable fall in their prices from before. In the household appliances, LPG for domestic supply, copper utensils, iron/steel/kerosene stoves has come under 5% slab from their earlier 18-19% rate slab. Many items such as fresh milk, fresh vegetables, fresh fruits, salt, puffed rice, bread have either stayed where they were or have seen an exemption from the inclusion in GST.

 

Services, on the contrary, have not seen a steep rise or fall. The services that have become costly has much to do with the upper or the elite class such as accommodation in a five-star hotel, travelling in the business class, dining in an AC restaurant. Rather, middles class has seen more advantages in the services than in goods.

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To say that GST is a boon or a bane can be too early to predict. Like every other substantial change, it has its own merits & demerits. Its actual impact will, eventually, get determined in the long run. For now, there has only been a rise in maximum items of the usage. The manufacturing sector was to benefit the most from the GST but, again, it is too soon to be assertive on any fact. So, to conclude, it’s true that GST hasn’t come down easy on the middle class. At the same time, we must show our patience in reacting to its outcome in this initial period.

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