GST is a week away: How to time your buys to have best of two tax regimes
Despite skeptics raising doubts about smooth transition of existing tax regime to Goods and Service Tax structure, the stage is set for GST roll out on July 1 from midnight. A special session of Parliament too has been convened for the launch of GST.
All states except Jammu and Kashmir have passed GST enabling laws with West Bengal having promulgated an Ordinance for the purpose. This is going to be a historic moment when existing taxes will cease to apply and new uniform taxation will take over.
There is apprehension in markets prompting many outlets to announce discounts. Online shopping sites are every day announcing new pre-GST discount sales.
GOLD AND JEWELLERY
This is perhaps the best time to buy gold jewellery. Though the tax incidence on gold remains unchanged on the two sides of GST divide, it is the making charges that are going to make gold jewellery costlier under the new taxation regime.
At present, gold attracts one per cent excise duty and two per cent VAT. From July 1, there will be three per cent GST on gold. But, while making charges are not taxed at present, the craft would attract 18 per cent GST from July 1 making gold jewellery expensive.
But, if you are looking to invest in gold bars, biscuits and the like, better check the international rates.
Pre-GST tax incidence on mobile phones is around 13.5 per cent while after GST roll out it will be 12-18 per cent. Chances are that the mobile phones will become costlier by 5 per cent. The impact will be more felt in the southern states.
While the rest of India has a VAT of 12 per cent on mobile phones, the southern states levy 5 per cent VAT on them. So, traders in those states fear huge loss as under the GST they cannot claim input credit for their stocks piled for over a year. This has led to clearance sale at many places in the south. Many online platforms have offered greater discount on these phones sourcing them from southern states.
The mobile phones made in India are likely to cost more in comparison to imported phones under GST regime. So, if you are looking for one of the Indian brands, this is the best time to buy one. Since, there would not be much difference in price of these phones after GST, you may wait or go for it if discount rate is more than 10 per cent.
CAR AND BIKES
This is tricky area of purchase. Smaller cars are likely to become costlier by 8-10 per cent. So, if you are planning to buy one, the next seven days are for you to execute your plans. You may also get a discount in the range of 5-10 per cent as the dealers are apprehensive about the sale equation once GST is rolled out on the midnight of June 30th.
But, if you have been waiting for SUV and luxury cars, then wait for a little longer. Big cars are will attract 28 per cent GST from July one. At present, taxes on SUV and luxury cars are over 32-33 per cent.
For those looking for two-wheeler, a wait for another week is advisable. They may purchase a bike of their choice about two per cent cheaper.
LAPTOP AND DESKTOP
Laptops and desktops are set to become costlier as the present tax incidence on them is about 15 per cent which is set to go up to 18 per cent on July 1 Gold Bar Price in India Today.
The prices of branded laptops and desktops would rise by around 5 per cent in effect. Though, the difference of rates between the online stores and offline retailers would be bridged a bit after GST roll out.
But, if you are planning to buy a laptop, you may easily find some of the best discount sale as the inventory of over one year old would not bring the benefits of input credit to the traders. Clearance sale is being seen everywhere.
TV AND FRIDGE
Television and refrigerators attract differing rates of taxes in different states. Generally the tax ranges between 23 and 28 per cent. But, revenue states like Delhi do not charge entry tax or octroi, TV and fridge usually cost lower.
Under GST regime, TV and fridge would attract 28 per cent tax. So, except in places like Delhi, there would not be much difference between the pre-GST and post-GST prices of TV and fridge. There would be nominal increase of about 2-3 per cent in prices.
It is better to wait for GST roll out as the dealers would then be under pressure to clear their stock of over six months old. The consumers are likely to get more discount than at present.
Same logic applies to furniture where wooden furniture is affected by GST regime. However, furniture made up of plywood, plastic and iron-steel is likely to cost more. But, then the dealers would be under pressure to clear stock after GST roll out.