As the country prepares to embrace one tax, oneIndia regime post the rollout of Goods and Services Tax (GST) on 1st July, 2017, the question everyone’s asking is, how much will the new indirect tax reform impact the day-to-day life of people across India?
It’s the time of hot sun doing the rounds and therefore, the urge or say a need to buy an air conditioner or a fridge would be more prominent now, isn’t it folks? The GST council has formulated a tax structure keeping various goods and services in 4 slabs of 5%, 12%, 18% and 28%. Incidentally, the GST Rates for consumer durables are pegged at 28%, raising the prices by 3%-4%. At a time when lenders are ready to cater in to literally every single need of the human, it is obvious many like you would opt for a loan to buy a consumer durable product. Consumer durable loans are categorized under personal loan, which can be availed from banks and non-banking financial companies (NBFCs) for serving various purposes. The lenders finance such products for a tenure of 3 months to 2 years at an interest rate of 13%-25% per annum. So, if you are eyeing to buy the following air conditioners on a consumer durable loan, check out the impact of GST Rates on your wallet.
The 5-star rated, 1.5 ton split air conditioner with intelligent eye feature is currently priced at 60,000. Post-GST, the price will surge upto 62,400. Those who had availed a consumer durable loan to buy the AC when it was costing ₹60,000, the EMI, interest outgo and overall repayment would have been ₹2,853-3,202, ₹8,460-16,855 and ₹ 68,460-76,855, respectively. After GST, you would have to shell out more by paying an EMI of ₹2,967-3,330 and interest of ₹8,799-17,529, raising the total repayment amount to ₹71,199-79,929.
The 1-ton 5-star AC is priced at approximately ₹55,000, which would jump to ₹57,200 post the GST rates. The EMI, interest and total amount to be repaid during pre-GST are likely to be ₹2,615-2,935, ₹ 7,755-15,450 and ₹ 62,755-70,450, respectively. But when the GST comes, the amount of EMI, interest and total repayment would rise to ₹2,719-3,053, ₹ 8,065-16,068 and ₹ 65,265-73,268.
The approximate price of the air conditioner stands at about ₹62,000. When the GST rates are applied, the price of the product will go up to ₹ 64,480. The EMI, interest and the overall repayment liable would be ₹ 2,948-3,309, ₹ 8,742-17,417 and ₹ 70,742-79,417, respectively, in the pre-GST era. But post-GST, be ready to pay more as the EMI would be ₹3.065-3,441. While the total interest repayment is likely to at ₹ 9,092-18,113, which means the overall outgo would be ₹ 73,572-82,593.
Note-All these calculations are made taking into account an interest rate of 13%-25% and loan tenure of 2 years.
The cost of a loan is dependent mainly on the EMI calculator that computes the monthly installments based on the amount of loan, interest rate and the period for which the customer has to service the credit. More the interest rate will be, greater is the amount of EMI to be paid, resulting in a massive inflow of interest income for the lenders. However, people, with a view to shorten the EMI amount opts for a longer tenure and end up paying much more interest which could be easily avoided by choosing a shorter period. Yes, the EMI will go up slightly. But with the prospects of massive saving in terms of interest repayment existing with a shorter tenure, you should choose that option. So, do use the calculator while buying any of the air conditioners stated above or others.
I guess, this write-up showing the correlation between GST Tax Rates and air conditioners on loan would have given you the requisite information to make a sensible buying decision.
Stories by Anvi Sharma