GST what? How this 'historic' bill will affect you and me

The Rajya Sabha on Wednesday, August 3, passed the Goods and Services Tax (GST) constitutional amendment to unify indirect taxation in the country. The Bill aims to "increase India's GDP by 2 per cent", according to the Union finance minister Arun Jaitley, but could lead to inflation.

The Bill still has to pass through the Lok Sabha and will come into effect in the second quarter of next year, so the expected inflationary pressure isn't expected to hit until after elections in Uttar Pradesh, Punjab and Gujarat. This is a big win for the BJP.

Also read: How Jaitley-Chidambaram sparred over GST Bill

So the million dollar question is, how will this affect you and me? What will get expensive, what will get cheaper and by how much?

Services will get more expensive:

Eating out, phone bills, watching movies, etc, are going to get costlier.

For example, if you go out to eat now and get food worth Rs 1,000, with VAT and service tax you end up paying Rs 1,185 (18.5 per cent tax). Under GST, this is expected to go up to around 20 per cent, meaning your food bill goes up to Rs 1,200.

Also read: Rajya Sabha clears GST Amendment Bill. Twitter hails the big feat

Also remember, the number of people which will be hit by this part is considerably small compared to number of people which will be purchasing goods like TVs, cars, readymade garments etc, which are about to get cheaper.

For example, a 12.5 per cent excise duty is slapped on a car costing Rs. 5,00,000. Along with VAT, the cost of purchasing comes to aroughly Rs 6.25 lakh. Under the GST, it is expected to go down as much as Rs 35,000 if the rate is fixed at 18 per cent (could be 20 per cent too), so the price you pay is much cheaper.

The GST is a double-edged sword, whose impact on you will majorly depend on your lifestyle choices.