The much awaited GST Bill (Goods and services tax) has got into effect in India from 1St July 2017. Curious about what will be the effect of GST on the tech world? GST is a bit complicated to understand for us and the technology consumers are also wondering about the impact of it on our tech life. So, we at simplified techy have come up with the solution to make it easy to understand GST’s impacts on tech world. First of all we have to understand the previous tax system of India and then GST.
The previous Tax System of India
The system of taxation in India since the economy began to be open was an Indirect Tax system, in which the tax we were paying consist of a number of different taxes applied from the raw materials to manufacturing to whole sale to retail, which were set by considering Central government’s taxes as well state government’s taxes. Due to these conditions the tax rate over all the goods and services were different and the tax of any good or service could vary state to state resulting different prices of same thing in different states.
What is GST and how it will work?
The Goods and services Tax (GST) is going to make a revolutionary change in our previous taxation system. Implementation of GST in India has rolled on 1st July, 2017. GST is a combined tax and is comprised of only two taxes which are namely CGST (Central GST) and SGST (State GST). With GST we will have to pay only one combined tax instead of VAT (Value-Added Tax), Central Excise, Service Tax, Subsidiary Taxes and Octroi and others.
The GST council has put almost 1200 goods and 500 services on 4 different tax slabs which are 5%, 12%, 18% and 28%.
Impact of GST on Tech World
Hope I have been successful to make you all understand the structure of GST in a brief way. So know as we know about GST and the previous tax system of India we are all set to discuss about the effects of GST in India and on Indian tech industry.
As we all have so many questions in our mind about how GST is going to affect the prices of Smartphones, laptops, or desktops? Whether the prices of home appliances like TV, Refrigerators, AC and other things are going to rise or will it decrease? Will Shopping with the e-commerce website get cheaper or expensive? Will it attract more international manufacturers of electronics and many more. So here we have come up with the answers of some of these questions. Bellow we have tried to sum up the impacts of GST on the electronic and tech world.
Smartphones, Tabletes, Laptops & Desktops
The prices of Smartphones and tablets are going to be cheaper. As the tax rates of the smartphones were higher than 13.5% and after GST it is set on the tax slab of 12% we can assume that the price of smarphones will fall down a bit. The smartphones vendors like xiaomi, Samsung and others have also have assured for it and as the news have come Apple has already decreased its price for iphones and ipads. If we talk about Laptops and desktops, the levy for these in the previous tax system was 14-15% which is going to increase by 3-4% as the tax slab for it is set on 18%.
If you are used to shop online then we have some good news as well as some bad news for you. Till now the ecommerce companies did not collect taxes but after GST they will collect 1% tax while paying t the sellers listed to their respective websites which will result in making your shopping experience expensive. Another bad news is, the discount and freebees will fall in future. Since they have to pay an additional tax on the discounts and also they will have to pay the tax on the price it has purchased the goods from the supplier, it will not be worth to offer discount in many cases. The good news is that the delivery of your goods will be faster as the sellers won’t have to do the extra paperwork they could provide us a faster delivery. Till now the sellers had to do some extra paperwork by filing separate bills for logistics and another for the state tax making it an extra burden on them which caused the delay in delivery. The exchange and cancelation of you orders is also going to be difficult. After GST the online shopping sites have to bear the tax on their own case of cancellation and returns which would be refund later by the government it will result as the major cash flow disadvantage for these companies which will make it difficult to cancel or return orders for you.
The prices of home appliances are going to rise. As per the previous tax system these were in the range of tax between 23-26% varying according to states, now all the household appliances from big one such as Television, Air Conditioners, Washing Machines, Vacuum Cleaners, Water Heaters, to the smaller ones as Mixure Grinder, Griller, Toaster, fall into the 28% tax slab which results the rise of tax up to 4 -5%. Be ready to pay more for your household electronics.
Printers, Scanners, Fax Machines
The tax rate for all the single function and multi – function printers as well as scanners, fax machines and others has been raised. The tax on these devices in the previous system was about 16 – 18% which is now fixed on 18% tax slab. This rise in tax rate will increase the price of the all these devices a bit.
Monitors and speakers, Cables, Cameras
Monitors, Cameras, Speakers, Cables and others are in the 28% tax slab. The prices of these all electronics will increase as the tax rate has been increased. If you are willing to by these items be ready to pay more than it was before GST.
Mobile Bills, Telephone Bills and Internet charges
If you were expecting your mobile bills to fall after GST then this will be disappointing news for you. The telecom bills are going to rise by 3% making a dent on your pocket. Before GST the service tax of telecom bills was 15%. In GST the telecom services have been put under 18% bracket. Even Airtel, the leading telecommunication company of India and other service providers have confirmed that the mobile bills, internet charges and other telecommunication bills will cost more in the next few days.
These are some important GST impact on technology world in India, we have listed here. We are continuously keeping our eyes on the updates of GST and will be posting them if we find something considerable about our tech industry. Till then keep in touch and please share your views and feedbacks on the comment section. If you have some queries which we couldn’t include in this post feel free to ask us, we will be more than happy to resolve them.