Public clamor has already started in every nooks and corner of India, the government is all ready to welcome GST into the Indian taxation system. Many of us were waiting for this particular day since Mr. Narendra Damodardas Modi took over as the Prime Minister of India in the year 2014. After long days of hue and cry over the taxation system, the finance ministry of India has decided to stipulate the exact rates of GST i.e. 5%, 12%, 18%, and 28% while exempting approximately 80 items under the purview of GST taxation system.
Impacts of GST are affecting banks and financial institutions as well. These institutions and organisations make available loans to their customers to improve their credit growth. Loans like personal loan, home loan, car loan etc. charges service tax which is 15 % for the current taxation system. But once GST takes over the market ecosystem then the service taxes will be replaced with a standard rate of 18%. If you are doubtful about the cost of the service rate government of India have issued an online free GST calculator to calculate the rates of various products and services. Regardless of the expensive loan affairs, it is important to study each one of them individually to analyse an outlined perspective of the services rating system under the GST calculator.
Influence on Personal Loan
In case of Personal loan for various banks, service tax is included in processing fee and prepayment charges. Normally a bank charges a rate of 1-2% processing fee or prepayment charges. But under the GST regime standard GST rate will be charged (18%). In addition to the casual rates of processing fee of the loan amount service tax is levied on all the banks of India i.e. if a loan amount of Rs. 5 lakh is sanctioned, then the processing fee ranges from Rs. 5000-10,000 and the service tax rate will be 18% instead of 15%.
Similarly, under the current tax system prepayment charges carries a fluctuating rate of 2-5% of the outstanding loan plus the service tax of 15%. But after the post-GST the service tax will amount 2% higher than the casual service tax rate.
Influence on Home Loan
The home finance division under the GST regime is still a hazy part. There are a large number of financial queries still pending to clear out. Although the charges of processing fee has been cleared out, where the service rate will be 18% instead of 15% for some period of time. This rate may or may not change depending on the economy environment. Along with the processing fee of 0.25-1% of the loan amount as of now standard GST service tax of 18% will be charged as a replacement for the current service tax rate of 15%.
Likewise, in case of prepayment charges the home loan floating rate does not tolerate any charges. Therefore the fixed rate of home loan can be charged at 2-3% of principal outstanding plus the standard GST tax rate of 18%.
As far as home loan is concerned property under-construction will be applicable on the sale of property at 12% GST rates which are inclusive of the land value. Sanction of home loan amounts could be estimated with the help of GST calculator. It will provide the customer a comprehensive amount of tax to be paid for under-construction property or ready to move in property rates.
Influence on Vehicle Loan
Luxury cars like Mercedes, BMW, Jaguar and so on prices are expected to go down under the GST regime. Enactment of GST is likely to be a great advantage for people wanting to bring home luxurious cars. The prices are estimated to go down up to 2-6% to the reduction in the complete tax incidence by about 7-12%. On the contrary, the rates for mid sedan and SUVs will go down by 2-3% only. However, there will be no huge change in the rates of small cars and the prices are anticipated to remain the same almost equal to the current taxation system.
The GST taxation regime is a common nation-wide tax which is based on the VAT principle that replaces 17 indirect taxes which was charged by the Central or the State government during the current taxation system upon various products and services. The rate of GST tax on various items and services can be calculated with the assistance of an online free GST calculator. Dramatically saying, in less than 12 hours GST will swing market grounds and set the Indian commerce on fire.