How Is The Gst Going To Affect The Middle Class?

By Author: Mohit Yadev
Total Articles: 74
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With GST effecting almost all sectors except petroleum products, milk and a few others, you can bet there will be a considerable difference in the prices of various commodities and goods one uses daily.
I think the biggest difference to the common man will be noticeable in the FMCG(Fast moving consumer goods) sector. Goods like soaps, toothpaste, softdrinks and a few others are being taxed at a standard 18% now. Earlier they were taxed anywhere between 24–28%. Consequently, goods like shampoos and chocolates are getting costlier as they are classified in the 28% slab. So yeah, not everything is becoming cheap.
But there’s good news for the middle class in the auto sector as tax rates will now fall from an average of 35–40% to a standard 28%. Which means the bike or car you wanted to buy has got a bit cheaper. So yeah, good news here too.
But let me tell you something most of the middle class is not aware of. GST will create a huge opportunity for the middle class in the stock markets. Yes, you read that right. The Stock Market! How? Let me explain.
GST greatly simplifies how goods and services are ...
... taxed by removing a large number of intermediate taxes like Excise duties, octroi charges, VAT, state specific taxes, blah blah, etc. Until now, most mid and small size companies would engage in some form of manipulation of their financial records to evade some of these taxes. But with the GST being implemented, atleast in some sectors, the overall tax rate has come down significantly.
This will encourage companies to give up malpractices in financial records and become more transparent. This is where the actual twist comes in. You see, for a company to list its stocks in the BSE or NSE, they have to disclose a long list of documents and financial records. Until now, because of their malpractices many small and medium size companies had stayed away from these markets because they were too afraid.
As GST encourages them to be more transparent, there is hope that in the next few years more and more companies will list their stocks in the markets. But how does this really affect the common man and the middle class? Well, IMHO there are two ways
These indian firms raise money from markets (the reason why 99% companies list their stocks) and hence create more jobs and become stronger to foreign competetion. More jobs=more middle class youth employed=more growth.
The middle class has more investment opportunities. Although a very small portion (70–90 lakh) or 0.7% of India’s population is investing and trading in stock markets, this number is growing steadily everyday. And many new entrants are the 20–35 year olds. More companies listed=more investment opportunities=more growth.

In any case, more ease of business gives rise to more business which creates more jobs and more money to spend. Looks like a great story, if implemented well that is. A big IF…given how demonetisation went.
Know More GST Enrollment in India.