GST: What it means to me and my family

It's July 1st, and the anxiety brewing in my mind (far, far bigger than the prep needed before my children commence school after the summer hols) is around the commencement of the Goods and Services Tax (GST). Now my husband who is a senior business journalist for a leading digital company told me a couple of days back that the GST is the biggest tax reform in independent India that will affect the rates of goods and services we use – from soaps and diapers to cars and mobile services. 

Now, to be honest, I don't understand all this tax lingo much. All I was thinking (as hubby tried to explain things in the background) is what crisis this GST is going to spell out on my household budget! 

Now it is a general tendency to go on a shopping spree before any such event because one doesn’t really expect things to become cheaper... Right? Even I was tempted by all the pre-GST sales hype. How could I not? Forget day-to-day household goods, our neighbour just parked a new set of swanky wheels in his driveway last Friday! 

As I tune back into what hubby is saying, I hear this: "But the government has taken care to ensure that most products and services that are used by us on a daily basis don’t become more expensive." Aah! What a relief... 

And hubby has more reassuring news: "Whether a company raises or cuts prices of an item depends on various factors and tax is just ONE of them. Remember, you are concerned with the maximum retail price of a product or MRP as we know it. That may or may not change, no matter even if the tax on it is higher than before." 

Hmmm... this tax discussion was getting to be interesting... but I needed more "real" information...you know, like specifics... I ask him about shampoos, skin care items, detergent and so on...

"Now if we take shampoos, skin care items and detergents... these will have a higher duty (28% compared to 22% earlier), but the prices may still not rise as the companies may choose to absorb the tax, given that the competition is high and demand subdued and any hike may dent the demand further."

This time there's a longer hmmmmmm from my end... Thank God, my already expensive night cream won't be getting more expensive! My elder daughter, Aadya, who is sitting close, playing her favourite game on the iPad, jumps right into the conversation (so finally there's something that manages to get her attention off the screen - GST it is!). 

"Papa, what about chips, chocolate and icecream?" asks the 9-year-old with a troubled expression!

Before hubby can respond, I do: "Aadya, whether they get expensive or not, you are not getting to eat any of this... okay?" As I get up to make tea, I hear this: 

 "Gunjan, not much luck there...companies normally don't tinker with price points of namkeens, chocolates, ice creams and other such items that are sold in Rs. 5, Rs. 10 and Rs 20, as transactions are easy in these denominations... but yes the weight of the items may reduce, so Aadya will eat less chips from the same packet that may continue to cost the same, but let's wait and watch... the full impact will come once the changes cost of raw materials has been assessed by these companies. Haan, agar price change hoga toh larger pack sizes ka hoga."

As we sit down for tea and I bite into a biscuit... I get another piece of info: "Biscuit prices may may come down – little bit – as the tax on them will come down by 3% to 5%."

And so the GST chat carries on over tea and here's the gist of it...

• Milk prices will stay the same but milk powder and baby food items may become cheaper as market leader Amul has expressed its intent to do so. Aerated drinks like Coke and Pepsi will be more expensive but the mineral water marketed by these same companies may become cheaper.

• Cereals will be cheaper due to zero duty on them. So will be soaps, hair oils and toothpaste (as they will attract 18% duty as against 22%-24% earlier).

• Sugar, tea and coffee (barring instant coffee) will be levied 5% tax, nearly unchanged. There will be nil tax on instant coffee. 

• Post-paid mobile services will become more expensive due to higher tax of 18% (compared to 15% earlier). But the higher tax rate may still not hurt pre-paid customers as companies may choose to continue giving full talk time on the vouchers due to the intense competition in this segment.

• Small cars may become slightly cheaper though prices of mid-sized cars may remain same. Luxury cars will become expensive.  

As we sip the last bit from our tea cups - I realise that's the longest ever money talk (or shall I say tax talk) I've had with my husband - and surprisingly it was not the least bit "taxing"!

And for all the families out there (like us) who were wise enough not to be drawn into the pre-GST marketing gimmicks, pat your back! Irrespective of whether the item of your interest is going to be cheaper or more expensive: HOLD. It is never a good idea to go on a shopping spree based on all types of information flying around. 

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The coming days will tell us exactly what the GST means for our families - just remember we all are in the same boat - so keep sharing your GST story - 'how it is affecting you - do you think it's good or bad? It's rightly said: 'A sorrow shared is cut in half  and a joy shared is doubled.'

I look forward to hearing from you - please post your comments below... let's get talking...