GST helps households save Rs 320 a month: Report

The Goods and Services Tax (GST) has helped households save an average of Rs 320 per month on the consumption of staples such as cereals, edible oil, sugar, snacks and sweets, according to a report by Hindustan Times.

The GST regime, which came into effect on July 1, 2017, enabled a household to save Rs 94 a month on the consumption of cereals such as rice because no GST is levied on them, according to a Finance Ministry note reviewed by the newspaper. Before the GST regime, an indirect tax was levied on wheat, flour and rice that amounted to 2.5 per cent, 2.75 per cent and 3.5 per cent, respectively. Under the GST, tax rates on these essential items were slashed to zero.

The note, which was prepared by the ministry to ascertain the impact of the GST, stated that a household saved Rs 70 per month on other miscellaneous products such as spices, curry paste, hair oil, soap, toothpaste, rubber bands, footwear, brooms and school bags.

Savings of Rs 320 per month is not small for the poor and the neo-middle class, said a government official. "GST has helped the common man by adding some more money in his monthly kitty. Direct taxes are paid by those who have a certain level of income, but indirect taxes are paid by every person. In the pre-GST era, it was largely in the range of 21 per cent to 33 per cent or even more on various goods or services or commodities but with the GST regime, the indirect taxes were reduced on most of the essential goods and services," the official said.

According to the report, the change in rates of several products was high because several local taxes that were levied under the old regime were scrapped when the GST was implemented. "Levies like entry tax and octroi had an impact of about 2 per cent on the cost of products,” another official said.