"How GST Impacts India's Middle Class: A Taxing Reality"

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The Great GST Gamble: How India’s Tax Roulette Spins the Middle Class Dizzy

In 2017, India rolled out the Goods and Services Tax (GST) with the fanfare of a Bollywood blockbuster premiere. Billed as the ultimate tax reform to unify the nation’s chaotic fiscal landscape, it promised "One Nation, One Tax, One Dream." Eight years later, the middle class is still waiting for the dream sequence, stuck instead in a tragicomic plot twist where their wallets play the starring role in a never-ending tax saga.


 

A Tax by Any Other Name

GST was supposed to simplify life. No more juggling a dozen state taxes, no more cascading tax-on-tax nightmares. Instead, we got a shiny new system with four tax slabs (5%, 12%, 18%, and 28%), plus a cess here and a surcharge there for good measure. The middle class, ever the optimistic hero, thought this would mean lower prices and smoother transactions. Spoiler alert: it didn’t.

Take Rajesh, a 35-year-old IT professional from Bengaluru, who earns just enough to dream of a two-bedroom flat but not enough to escape the taxman’s watchful eye. Rajesh’s morning coffee, once a humble ₹50, now costs ₹59 thanks to an 18% GST on café bills. His dosa, classified as a "luxury item" because it’s served in an air-conditioned restaurant, also gets slapped with 18%. Meanwhile, the roadside chaiwala’s tea is taxed at 5%, because apparently only the elite sip cappuccinos. Rajesh sighs, “I’m not sure if I’m funding the nation or just the tax department’s coffee machine.”

The Middle-Class Math Problem

The GST council, in its infinite wisdom, decided that essentials like toothpaste, soap, and shampoo—items even the middle class can’t live without—are worthy of an 18% tax. Meanwhile, gold, the preferred investment of every Indian aunty, lounges comfortably at 3%. The logic? Apparently, brushing your teeth is a luxury, but buying a gold chain is a cultural necessity.

Then there’s the curious case of GST on services. Rajesh’s son attends a coaching class for JEE prep, because in India, not aiming for IIT is practically a crime. The classes cost ₹50,000 a year, plus 18% GST, because education, it seems, is a taxable privilege. When Rajesh grumbled about this to his colleague, she quipped, “At least the government’s teaching us a lesson in budgeting.”

Restaurants, movie tickets, and even gym memberships—staples of middle-class aspirations—are taxed at 18% or higher. Want to stay fit? That’s a luxury. Want to watch the latest Shah Rukh Khan flick? Pay up. The middle class, caught between wanting to live a little and keeping their bank accounts alive, is left performing mental gymnastics to balance their budgets.

The Compliance Circus

GST didn’t just tax goods and services; it taxed patience too. Small businesses, which many middle-class families rely on for their side hustles, were thrown into a bureaucratic blender. Filing returns, navigating the GST portal, and decoding cryptic tax codes became a full-time job. Priya, a freelance graphic designer from Pune, spent three hours trying to file her GST return, only to discover her client hadn’t paid the tax upstream. “I’m not a tax evader,” she says, exasperated. “I’m just a designer who wants to get paid without needing an accounting degree!”

The GST portal, with its legendary crashes and user-unfriendly interface, is the stuff of middle-class nightmares. It’s like the government decided to make tax compliance a reality show called Survivor: Tax Edition. Spoiler: no one wins, but everyone gets an audit notice.

The Inflation Illusion

The government claims GST has streamlined the economy and reduced inflation. The middle class, however, begs to differ. Prices of everyday goods haven’t exactly plummeted. A packet of biscuits, once ₹20, now costs ₹24 with GST. Multiply that across groceries, utilities, and school supplies, and the middle class is bleeding rupees faster than a monsoon flood.

Economists argue that GST has eliminated hidden taxes, but for the middle class, it feels like they’ve just been swapped for visible ones. “I don’t care if it’s called GST or VAT or XYZ,” says Anita, a schoolteacher from Delhi. “All I know is my grocery bill looks like it’s auditioning for a role in a horror movie.”

The Dream That Never Was

The middle class isn’t asking for much—just a chance to live without feeling like every purchase is a patriotic donation to the taxman. GST was sold as a unifying force, but it’s united the middle class in one thing: frustration. From dining out to buying a new phone, every transaction comes with a side of tax-induced heartburn.

As Rajesh sips his overpriced coffee, he muses, “Maybe I should move to the moon. No GST there, right?” Unfortunately, with India’s space ambitions, even lunar coffee might soon come with an 18% tax—and a cess for good measure.

In the grand GST gamble, the middle class is the player who keeps rolling the dice, hoping for a win, but landing on the tax square every single time. Roll again, Rajesh. The house always wins.

 

GST on cars

Let’s say a small petrol car costs INR 5,00,000 (before tax).

  1. GST Tax: The government adds 28% tax on it.

    • 28% of INR 5,00,000 = INR 1,40,000.
  2. Extra Cess: Another 1% tax is added.

    • 1% of INR 5,00,000 = INR 5,000.
  3. Final Price:

    • INR 5,00,000 + INR 1,40,000 + INR 5,000 = INR 6,45,000.                       

      GST on import of cars

      Import of cars attracts IGST. The value considered for calculating IGST is the assessable value + basic customs duty.

      For example,

    • Assessable value= Rs.5,00,000
    • BCD= Rs.50,000
    • Value for charging IGST= Rs.5,50,000
    • IGST at 28%= Rs.1,54,000

    To promote ‘Make in India’, the government has increased customs duty on imported cars:

  4. Semi knocked down kits of passenger vehicles- Increased to 30% from 15%.
  5. Completely knocked down kits of passenger vehicles- Increased to 15% from 10%.

Customs duty is included in the value for charging IGST. This will lead to an increase in IGST amount as well. Thereby increasing the overall price of the product.

Exemptions of GST Rates on Car

Indian government offers special GST concessions on four types of vehicles to promote affordability, accessibility, and sustainability.

  1. Electric Vehicles (EVs) – In this section only 5% GST is applicable. The intention is to promote green mobility.
  2. Ambulances – 12% GST, reducing costs for hospitals
  3. Used Cars – GST applies only on the profit margin, not the full price. No tax applies if sold at a loss, making pre-owned cars more cost-effective.
  4. Vehicles for Persons with Disabilities – GST discounts lower prices for specially designed vehicles, ensuring better mobility and independence.

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