The rush is on. Offers are flowing in galore. Car sellers are doling out freebees and pre-GST prices. Electronics and consumer durables dealers are rolling out the red carpet with steep discounts and other goodies. Even some big ecommerce players are looing to roll-out pre-GST shopping sales. It is almost like the industry wants to bring forward the festive season to June from September-November.
It is not as if prices of all vehicles, phones, air-conditioners, refrigerators and other items will sky-rocket once GST is implemented, it is just that the process of claiming tax credit on old stock held on July 1 will become cumbersome. Where documents are available in the GST prescribed format with dealers on July 1 for existing stock, there won’t be an issue, but in any other case, only 60% credit for excise on such inventory will be available.
This implies a loss or write-off of 40% of the excise duty amount for dealers without the prescribed documents. As no dealer would like to take a risk on this and increase compliance bur- den, most are keen to clear stocks before the new regime is ushered in. Remember the stock-clearance sale on two-wheelers before the BS-III phase- out? The implementation of GST is turning out to be another regulatory bonanza for customers.
For individuals therefore, this is a great time to go shopping. As far as your other personal finances and investment decisions go, though, there isn’t much to be perturbed about. There are a few opportunities being thrown up as a result of the transition for opportunistic gains, but at a macro level, things should go on as business as usual.
A keenly watched area is digital payments. While the government is keen to promote digital payments and non- cash transactions and is offering certain incentives to small enterprises, the increase in Service Tax rate from 15% to 18% GST rate can lead to a 3% incremental cost for transaction services. It is unlikely that any player in the payments business will absorb the increase, hence transaction costs will go up. But since the charges on such transactions are usually nominal, the 3% increase may not translate into a very material increase.
In a broad sense, the change in indirect tax regime to GST does not in any significant way alter the landscape as far as the personal finances of individuals are concerned. Hence, there is no reason to suddenly alter your long-term financial plans for GST. All decisions taken with regard to savings, investments, loans and spending should broadly be driven by the fundamental principles in each case.
Nevertheless, it helps to keep abreast of the revisions and under- stand the implications of any big regulatory move like the implementation of GST on your finances. Therefore, we share snapshots of key issues you should be aware of for mutual funds, insurance, banking & loans and home buying & financing in the pages that follow.