“There is nothing certain in life except death and taxes.” – Benjamin Franklin.
In India, one of the most talked-about taxes in recent years is the Goods and Services Tax (GST). Whether you’re buying groceries, booking a cab, eating out, or paying your phone bill, GST is a silent part of every transaction you make. But what exactly is GST, and how does it impact your daily expenses?
Let’s break it down in a way that’s clear, practical, and easy to relate to.
What is GST?
GST stands for Goods and Services Tax. It’s a comprehensive indirect tax that was introduced in India on July 1, 2017, replacing a complex web of taxes like VAT, excise duty, service tax, and others. Before GST, different states and the central government levied different taxes at different rates, often leading to confusion and double taxation.
Now, with GST, there’s a uniform tax structure across the country. Whether you’re in Mumbai, Delhi, or Bengaluru, you pay the same tax rate for the same item or service.
GST is divided into five main slabs:
- 0% – Essentials like milk, fresh vegetables, unbranded rice, flour
- 5% – Basic packaged food, life-saving drugs, footwear under ₹1,000
- 12% – Mobile phones, garments above ₹1,000, processed food
- 18% – Restaurant services, personal care products, telecom services
- 28% – Luxury goods like air conditioners, washing machines, cigarettes
This structure is designed to keep basic needs affordable while taxing luxury items higher.
Read Also: Everything You Need to Know About Income Tax Slabs and Regimes in India
Why Was GST Introduced?
Before GST, the Indian tax system was all over the place. Let’s say you bought a pair of shoes online:
- You might pay excise duty for the product being manufactured
- Then VAT for it being sold in a state
- And service tax for the platform that sold it to you
It created a system where taxes were being charged on top of other taxes, creating a cascading effect. GST fixed this by streamlining everything under one umbrella. It aimed to:
- Simplify the tax process
- Create transparency in pricing.
- Eliminate tax-on-tax
- Boost tax collection through compliance.
But how does all this play out in real life?
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How GST Impacts Your Daily Expenses
Let’s break down how GST touches almost everything you spend on:
1. Groceries
Impact: Mild to Neutral
Basic essentials like fresh fruits, veggies, unbranded pulses, rice, and wheat are taxed at 0%, which means they’re unaffected by GST. This keeps the basics affordable for everyone.
But the moment you move to processed or branded goods, GST kicks in:
- Example 1: A ₹40 packet of unbranded flour still costs ₹40 (0% GST).
- Example 2: A ₹100 packet of branded biscuits will cost ₹118 after 18% GST.
So, when you pick up that box of instant noodles, fruit juice, or breakfast cereal, you’re paying more not just for the brand, but also for the tax.
Extra Tip: Buy unbranded or local groceries when possible. They’re often cheaper and GST-free.
2. Restaurant Bills
Impact: Moderate
If you love dining out, GST will be noticeable.
- Small restaurants or cafés charge 5% GST (but can’t claim input tax credits).
- Restaurants in luxury hotels or those serving alcohol charge 18% GST.
Example:
- A ₹500 meal in a local café = ₹525 (5% GST).
- A similar ₹500 meal in a 5-star hotel = ₹590 (18% GST).
Pro Tip: Look at your food delivery app bill closely, many times delivery platforms break down GST and other charges.
3. Mobile & Internet Bills
Impact: High
Your monthly mobile recharge or broadband bill used to include 15% service tax. Now it includes 18% GST.
- A ₹500 mobile plan now costs ₹590.
- Over a year, that’s ₹1,080 more just in taxes!
Advice: Look for bundled plans or annual subscriptions often include taxes and give better value.
4. Fuel & Transport
Impact: Mixed
This is one area where GST hasn’t been applied uniformly. Petrol, diesel, and natural gas are still outside the GST system, and prices are governed by state-level VAT and central excise duties.
That’s why you’ll find petrol cheaper in one state and more expensive in another.
But for transport services, GST applies:
- Ola/Uber rides: 5%–12%
- Bus and train tickets: Mostly exempt or low GST
- Flight tickets:
- Economy class: 5%
- Business class: 12%
- Economy class: 5%
Note: If you travel frequently, check if GST is being added to your fare, especially for air travel.
5. Electricity & Water Bills
Impact: Low
Good news: Residential electricity and water are GST-exempt. So your home utility bills stay unaffected.
But in gated societies or apartment complexes, if the management charges for bundled services like:
- Security
- Gardening
- Maintenance staff
Then, an 18% GST is often added to those charges.
Tip: Read your monthly maintenance invoice. You might find GST hiding in your societal charges.
6. Clothing & Footwear
Impact: Noticeable
GST is structured to support budget shopping:
- Clothes and footwear under ₹1,000: 5% GST
- Items above ₹1,000: 12% GST
So, a ₹999 pair of shoes is taxed less than a ₹1,001 one!
Example:
- ₹900 jeans = ₹945 (5% GST)
- ₹1,200 branded jeans = ₹1,344 (12% GST)
Tip: Watch out for those threshold prices. Sales and discounts can make higher-taxed items more affordable.
7. Appliances & Electronics
Impact: High
This is where GST hits hardest. High-end goods like:
- Refrigerators
- Air conditioners
- Washing machines
- TVs over 32 inches
All attract 28% GST, the highest slab.
Example:
- A ₹30,000 air conditioner now costs ₹38,400 after 28% GST.
- A mid-range ₹20,000 smartphone may cost ₹22,400 after 12% GST.
Tip: Buy during festive sales, brands and sellers often absorb part of the GST to attract customers.
8. Education & Healthcare
Impact: Minimal to None
Two crucial sectors, education and healthcare, are mostly GST-free.
- School/college tuition: 0% GST
- Hospital services: 0% GST
However, some premium services may include GST:
- Private room with AC? 12–18% GST
- Cosmetic or elective procedures? Taxable
- Branded medicines? 5–12% GST
Tip: Ask for a breakdown of medical or education-related bills if you notice unexpected charges.
Read also: The 50/30/20 Rule: A Simple Budgeting Strategy for Everyone
The Bigger Picture: Has GST Helped?
Like most reforms, GST has had both wins and challenges.
✅ Positives:
- Simplifies the tax structure.
- Unified system across India.
- Reduces tax evasion.
- Encourages formal transactions.
- Boosts government revenue.
❌ Negatives:
- High tax on common goods like electronics.
- Burden on small businesses for compliance.
- Exclusion of fuel keeps petrol/diesel costly.
- Some services feel more expensive post-GST.
Tips to Manage GST Impact in Daily Life
Want to make smarter spending decisions under GST? Try these tips:
- Track Your Bills – Whether it’s a phone bill or restaurant receipt, know where your money goes.
- Buy Essentials in Bulk – Stocking up on 0% or 5% GST items helps save more in the long run.
- Use Cashback Platforms – Some digital wallets and apps offer deals or partial GST absorption.
- Prefer Local or Unbranded Goods – No GST means more value for your money.
- Plan Big Purchases Smartly – Wait for festivals or big sales; retailers often offer GST-inclusive pricing.
- Ask for Bills – Always get a GST bill, it helps track expenses and avoids being overcharged.
Read Also: Financial Literacy for Students: Budgeting, Saving & Investing Tips
Final Thoughts
GST has fundamentally changed the way India shops, eats, travels, and even communicates. While it simplifies taxation and makes pricing more transparent, it also increases the cost of many lifestyle-related items and services.
The best way to deal with it? Stay aware.
Understanding how GST affects your daily life won’t lower your tax bill, but it will help you budget better, shop smarter, and maybe even save more over time.
Knowledge, after all, is tax-saving power.