GST: Food expenses likely to go up marginally

While essential items may remain unchanged or see a decline, packaged goods may see a rise in price

Households should be prepared for a slight increase in monthly budget from July 1 when the new GST rates will apply. But, under GST, prices will be uniform across the country, which will make it more transparent for consumers. 

The budget for food is likely to be impacted marginally on the adverse side, if you are a big consumer of packaged goods. Many essential items of daily use such as vegetable oil, tea, coffee and cereals are likely to see a significant decline. Similarly, juices and ice cream could also see a marginal fall in price. However, sugar, condiments, ghee and cold drinks could see a rise. Similarly, prices of packaged goods may go up because the excise tax is lower now, while under GST most of them are in the 18-22 per cent range, said Sarika Goel, tax partner, EY India. 

 

“In case of food products, broadly there could be a marginal increase from the current 25-26 per cent (eight per cent excise plus VAT of 13-15 per cent) to 28 per cent. But milk, grains and cereals have been exempt, so there will be no change in these or there will be a decrease,” she said.

Toiletries such as toothbrushes, shampoos, soaps, detergents, perfumes, body creams etc. could see an increase in prices after GST. “The challenge for a lot of these fast moving consumer goods is that many of them are manufactured in places like Uttarakhand where the government gives exemption on excise duty. It is yet to be seen how this will impact prices. But broadly there could be a marginal increase in cosmetics of two-four per cent from the rate perspective, assuming no other change in costing,” Goel said.

While there will be no change in school or college fees as education continues to be exempt, books and coaching classes could get more expensive. As telecom services fall in the 18 per cent range under GST, consumers must be prepared for higher telephone bills and internet bills. Clothes for your family may also get more expensive as branded apparel prices could see a rise. Medicines will remain unchanged as there is no change in the tax, while cooking gas may see a fall in price.

Note: All the negative figures imply rise in your household budget Products such as salt, milk, vegetables have been left out as there is no impact on them. Source: EY