GST Leads to Savings in Monthly Budget! Think of Making More
In the GST council meeting held in the last week, the GST rates for 500 services and almost 1200 products were fixed by the members to give the effect from July 1, 2017. As per the categories, type, and usage of the products, the items are being classified into five different tax slabs, viz., 0%, 5%, 12%, 18%, and 28%. The implementation of the GST regime in India is expected to make things cheaper everywhere while removing the cascading effect of the current tax rules.
This means, your daily budget is going to get cheaper, and you are almost ready to make some more savings. So have you planned what will you do with those savings? Think of it now!
Impact of GST on Monthly Budget
The Government of India is trying to give effect to the Good & Services Tax as soon as possible because they believe that it will surely remove the ill-effects of the current indirect tax system in the country; and will make things cheaper while simplifying the tax procedures for the payees. After setting of the list of a large number of products and services, now it is important to examine whether it is actually reducing the budget of the households or not. By taking the following examples, we can understand the impact of GST rates:
- Items like milk, vegetable & fruits, basmati rice, atta, pulses will have no effect after GST, as they have 0% tax payable in the current indirect tax regime as well as in GST.
- The items like packaged tea, spices, packed paneer, which attract octroi, excise and VAT amounting to Rs.14, Rs.25, and Rs.21, respectively along with cess applicable, will be covered in the standard rate of 5% after GST. It will certainly make the items cheaper.
- At present, packaged chicken, juices, biscuits, sweets, etc., which are charged excise, VAT, octroi along with heavy cess values, will now be covered under the standard rate of 12% leading to a reduction in their total prices for the end consumer.
- Where items like corn flakes, hair oil, soap, toothpaste, etc., are attracting taxes amounting to Rs.37, Rs.42, Rs.7 + Cess, Rs.17 + Cess over and above their values leading to an increase in their total price shall now be charged at a standard GST rate of 18%.
- Some of the long-term purchase items which are durable in nature and hold a luxurious status like face cream, television, AC, refrigerator, shampoo, etc., which are currently charged at different rates are now under the 28% GST slab rate.
So accordingly we can elaborate that with the execution of the GST regime in India the household budget shall definitely be reduced leading to more savings. It is essential to make the best use of such savings instead of spending them on wasteful things.
You have two best options to make the right use of the savings on your budget.
I. Invest in ELSS to Lessen Down the Tax Burden
The first thing you can do with your savings on your daily budget is that you can put them into the ELSS mutual funds in India. This not only help you in generating capital growth but also reduce the income tax liability to a great extent. So isn’t it a great idea to make the use of savings in indirect taxes to reduce the burden of direct tax (Income Tax).
II. Opt for Liquid Funds to Increase Your Earnings
If you wish to put your saved amount for instant cash requirements, you can opt for the ‘Liquid Funds’ as well. It not only provide protection for your money along with liquidity but also help you in gaining higher returns at a very short tenure. You must take smart steps towards liquid fund savings.
Hence, it can be concluded here that GST is going to make the tax system simpler and will definitely increase your savings in the coming period, so it is your responsibility to make the most of it.
If you need any assistance for the purpose of making the best investment in mutual funds in India, then you must consult our financial advisors. We, at MySIPonline, will surely help you out in making your investment journey simplified.
Act now to achieve your goals.
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