After reducing the GST from the government, now companies have started preparations to benefit people. The government has reduced GST (GST) on about 400 goods and services. After this, companies of different industries are preparing to benefit the customers by reducing their prices according to the new rates to be implemented from 22 September.
According to GST rules, the tax rate is fixed at the time of the bill being made. This means that the old tax rates will be applicable to the goods distributed before 22 September. They will need to coordinate between manufacturers, wholesalers and shopkeepers to adjust them. Here, the government has said that it will keep a close watch on it so that consumers get full benefit of tax deduction.
Electronics
Companies hope that the demand will increase more in the festive season. Some companies will compensation to those dealers (distributors/retailers) who may suffer losses on unbeaten stock bills bills at older, high tax rates. For example, suppose an old price of an AC was ₹ 20,000. Earlier it used to be 28% GST i.e. ₹ 5,600. Now it will have 18% GST i.e. ₹ 3,600. That is, AC will now be ₹ 2,000 cheaper. Similarly, companies will compensate their dealers for the loss of the remaining goods at the old rate.
hotel
Rooms less than ₹ 7,500 will now be 5% tax instead of 12%. The guests who pay at the time of check-in will get the benefit of the new low rate. But if someone has already made advance payment, then even if their stay is after 22 September, only old tax rates will be applicable to them. For example, the fare of the first room was ₹ 6,000. 12% GST ₹ 720 was added to it. Now the same room will have 5% GST ₹ 300 only. That is, now ₹ 420 has become cheaper. But if this room has been booked and paid in advance before 22 September, then the old tax will be charged only ₹ 720.
How will companies benefit
According to media reports, distributors can ask for credit adjustment for goods purchased at the old GST rate. Companies will also have to update their system, billing software and point-off-cell machines. This improvement has been done keeping in mind the consumer. Since the GST is directly included in the price to be paid by the consumer, its rate is being reduced directly to the consumer. However, companies have several challenges, including labeled new prices on products, issuing credit notes and other operational changes.
Automobile
GST 2.0 has reduced tax on overall cars. Dealers are suffering a major loss on the involvement trains purchased at the old tax rate, because the cess that has already been paid cannot be withdrawn. Earlier, many big cars used to levy 50% tax i.e. 28% GST and 22% cess. Now the same car has come under 40% tax. That is, new cars have now become cheap, but dealers who bought vehicles at old rates are facing losses. After PM Modi’s announcement on August 15, the dealers who have stocked more vehicles, are now trapped because they are charged more tax.
FMCG Sector
From Biksit to shampoo companies can increase the size (gramade) of the pack instead of lowering the price of packs of ₹ 5 and ₹ 10. The rest of the products will be installed with new price stickers. The price difference between the manufacturer, distributor and retailer will be adjusted with credit notes.
Air travel
GST on premium economy, business and first class was increased from 12% to 18%. The old tax rates will be applicable on tickets booked before 22 September. But increased tax will be applicable on new bookings after September 22.
Insurance
Health and life insurance has been exempted from GST. Consumers save about 18%. Insurance companies are concerned about losing input tax credit and they can offer value-eds such as room updates or accident cover instead of reducing the premium. The government is urging them to benefit as a lower cost.