GST services tax rates: What's cheaper, what's costlier?
In the new GST regime, among many things, one that's going to get costlier is mobile bills. With the tax rate having been increased from 15% to 18%, users will have to shelve out an additional Rs. 30 if their monthly bill is above Rs. 1,000. Prepaid customers, meanwhile, will get talktime of Rs. 82 instead of Rs. 85 for every Rs. 100 spent.
Already-struggling telcos to be hit hard by the new tax
The inflationary effect is likely to impact telcos' earnings negatively. "The decision is a surprising one, given that you have an inter-ministerial panel looking into the financial woes of the sector," said former Bharti Airtel CEO Sanjay Kapoor. This makes things very difficult for the sector, which is anyway under high debt. The price war triggered by Jio's entry still hasn't settled down.
Other taxes to impact telecom costs too
It's not just the 18% tax that will push up costs; the telecom sector is the second largest buyer of diesel after Indian Railways, says Rajan Mathews, director of Cellular Operators Association of India. Hence central and state taxes on petro-products might also hit costs.
And, what about other goods?
Meanwhile, many other goods and services have become cheaper, including 50% of essential food items like rice and medicines, which will be completely exempt. Most items necessary for regular use have been included in the 18% tax slab. Meanwhile, aerated drinks and tobacco, and services like insurance, banking, internet and more are expected to get costlier.
Even eating out and watching movies will be expensive
Compared to other services, activities like watching movies, eating out at restaurants, gambling, race club betting and more is set to get heavy on the pockets. Tax rates for all these services (and more) have been fixed at 28%, the highest slab.
