Posted on 27/06/17 in others,

By Ajithkumar.

More just a couple or three more days left for the greatest revolution in our Indian society that is called as the act of GST (Goods and Services Tax). So you people might have heard everywhere people talking something about GST will it be good or bad for us or people talking about how it will affect day to day life. Today we will look how GST is going to affect the field of smartphones, technology, communication industry etc.

First, let's understand what is GST?

Goods and Services Tax is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition.
Which means to manufacture a product we undergo various stages like buying raw material, converting it into a product then finally it reaches the wholesaler then the retailer so tax is added at each and every stage.

You may wonder why we need GST. Well, the main reason is to spread the tax on a product to each and every stage from the raw material to the buyer. And another important point is that the tax collection becomes easy as the tax is inbuilt when we buy the product. And in some cases, it also helps the customers as it decreases the cost of the product.

Let us take a small example and compare the price before GST and after GST.

Before GST.

Let us take an example of pencil manufacturer.
He buys his raw materials for 10rs, for this let us assume that he pays a tax of 10% so the cost of the pencil will become 11rs.

Now the wholesaler buys the pencil for 11 and adds value to it by packing and increases the cost by 4rs and now the cost becomes 15 and he pays 10% tax for this so now the cost is 16.5Rs.

Next, the retailer buys the pencil for 16.5Rs and adds a value of 3.5Rs to it by advertising and retail shops so now the cost becomes 20 and he pays a 10% tax on it and the final cost of the pencil when the customer buys becomes 22rs.

Indirectly now the customer is liable for the whole tax and he pays 22rs for a pencil, which costs just 18.5Rs (11+4+3.5).

After GST

The manufacturer buys the raw material for 10 and he pays 10% tax for it and the cost becomes 11rs.

Now the retailer buys the goods for 11rs and adds a value of 4rs by packing it now the cost becomes 15 and now he has to pay a 10% tax.
Which is 1.5Rs but he won't pay the full tax since he has bought the product with a tax already paid i.e. (10rs product + 1rs tax)
So the wholesaler deducts the 1rs from his tax and pays just 0.5Rs so now the cost of the product becomes 15.5Rs.

In the next stage, the process continues the retailer buys it for 15.5 and adds a value of 3.5 and the cost becomes 19rs now he has to pay a 10% tax Which is 1.9 for 1.5Rs tax is paid by the previous members he deducts 1.5Rs and pays 0.4Rs to government and sells the product for 19.4Rs.

So you can see there is a considerable decrease in price so this is how it will help the customer in some cases, in some cases the cost may get incremented due to various other factors too.

Now let's see how this GST is going to make a change in the field of technology

1. After GST the smartphones are expected to become cheaper because the tax rate is reduced to12% from 13.5%.

2. Ola and UBER rates may come down as the rates are reduced to 5% from 6%.

3. AC and Televisions are expected to become expensive as their tax is increased slightly.

4. Laptops and PC prices are going to be expensive because their tax rate is increased by 3%-5%.

5. Gaming consoles and Games are expected to become cheaper as their tax is reduced by 1%.

6. Medical equipment and even medicines are expected to become cheaper.

So in the field of technology, we can say that GST is not going to affect anyone and it is in the favor of the customers. So let's wait and watch how the revolutionary act is going to change India and even we should pay our other taxes correctly so we can improve our nation together.

Jai hind.