GST Impact on Common Man

Introduction

Indirect taxes are born by the ultimate consumer of goods or services and hence, there is no denying fact that GST will impact every single person in India. Common man can be categorised into three classes;

• Below poverty line
• Average middle class
• Rich class

Let us assert the impact on the aforesaid classes.

• Below Poverty Line:
  In India, around 22% of the population is below the poverty line in India. No country which dreams of becoming an economic superpower can digest this huge number of poverty. In economics term, this category has negative savings.

However, GST implementation will have a favourable impact on this category of population. People in this category are starving for basic facilities, and these basic facilities have been kept out of GST bracket.Further, goods of mass consumption have also been kept under a marginal bracket of 5% tax rate.This is a welcome step by the government of India.

• Average middle class:
  This category of the population is often impacted by every little variation in price. This category of the population consumes whatever they earn or have generally very less savings. Hence, even a small inflation in price badly affects the average middle-class person.

These categories of class have the same reason to smile as category I people have. The goods of basic necessity and goods of mass consumption will attract no or marginal tax rate. Hence inflation will further comes down ultimately giving more power to the people.
Further, this category also consumes some basic luxury products which are currently taxed at 30 to 31%. These set of products will also get cheaper as they will attract tax rate of 28% and removal of cascading effect will further cut down the cost of production resulting from price fall.Hence, they also have the reason to cheer.

• Rich class:
  These categories of people are hardly impacted by the price change. Their demand for products is generally less elastic to price change. They are competent to pay for better luxuries and hence, should be taxed more.

As said, as per the GST tax structure, the luxury will be taxed at the highest rate of 28% which may further increase by levy of cess on sin and energy.
In the end, the paradigm shift in the history of Indian taxation bring hope of millions of poor and middle class people in India.

Conclusion

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