gst rate in india

GST Rates in India & Their Impact on Foods & Loans

The GST, both before and after the launch, has made an astounding impact on the lives of the common man in India. Just a few days before the mega launch of GST, billed as the biggest indirect tax reform since India’s independence, the whole of India went berserk by emptying the retail shelves across the country.

Aunties and uncles were all found buying 20-30 packets of biscuits, jams, bread and alike as if they can’t purchase these on or after 1st July 2017, the date when the GST rates in India were rolled out.

Adding more spice to the GST saga is the regular meetings and the changes in tax rates of several products and services to suit both the common man and business enterprises. You may know that Goods and Services Tax (GST) is levied at four different rates – 5%, 12%, 18% and 28%. So, what’s the GST tax rates now on foods, loans, etc? Let’s be detailed on the same.

GST Tax Rates on Foods & Food Products

You want your tummy full all the time, right? After all, you sweat and stretch for that very stuff. If you are reading newspapers regularly, you must have heard the news of retail inflation easing to 5.07% in January after rising for 5 months in a row. Policymakers expect the rate to ease further to 5%.

The reason attributable to a dip is the fall in vegetable prices. If we see the GST incidence on vegetables, it’s been 5%. Maybe the effect of a lower GST rate could not be realized earlier but now it’s transpiring into a reduction in prices.

A lot of credit should also go to the government which has made a concerted effort in hitting the ground. And not only vegetables that are in the lowest slab, but even tea, sliced mango, skimmed milk, edible oils, khakra & plain chapati, roasted coffee beans, packed paneer, cashew nuts, spices, pizza bread, rusk, etc, are also there to bring a smile on your face.

If we go little higher to 12% tax rate, you will find ghee, fruit juice, butter, sugar boiled confectionery, fruits, jam, chutney, namkeen, bhujia, packaged dry fruits, jelly, pickle, frozen meat products, etc, there.

The food products that find a place under the 18% slab include flavoured refined sugar, pastries, biscuits, ice cream, chocolates, soups, pasta, instant food mixes, salad dressings, corn flakes, curry paste, preserved vegetables, etc.

What’s on the Loan Front?

Loans and other financial services have got slightly expensive with the rollout of the GST tax rates in India. The impact of GST on loans is going to be on the processing fee and other charges pertaining to a credit. Before you get nervy, let me tell you that GST is not going to impact your interest rate in any way.

Before the introduction of the GST, 15% service tax was getting levied on those. Post GST, 18% tax rate will be charged on the loan charges.

Speaking of the loan, there are majorly three loans that people generally apply for. These are personal loans, home loans and car loans. Let’s gauge the impact of GST on these loans one after the other.

GST Impact on Personal Loan

The personal loan comes with a processing fee at 1%-2% of the loan amount across most lenders. Post the calculation of the fee, the GST will apply. So, on a personal loan worth 10 lakhs, the processing fee would most likely be 10,000-20,000. If we add 18% GST to it, the figure reaches to 11,800-23,600. In the pre-GST era, the processing fee would have been 11,500-23,000.

GST Impact on Home Loan

The processing fee of a home loan is lower compared to a personal loan as it ranges from 0.25%-1% of the loan amount. So if you apply for a 35-lakh home loan, you would need to pay a processing that equates to 8,750- 35,000. On adding 18%, the total fee would come out as 10,325-41,300. During the pre-GST era, the fee would have been reduced to 10,062.50-40,250

GST Impact on Car Loan

If you avail a loan to buy your dream car, lenders would deduct a processing fee at 1%-2% of the loan amount. Thus, on a loan worth 8 lakhs, the processing fee would amount to ₹8,000-16,000. The fee inclusive of GST would be 9,440-18,880. However, the processing fee in the pre-GST era would have been 9,200-18,400.

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