The recently implemented Goods and Services Tax caused large-scale confusion and uncertainty in the market. Both traders and consumers were left puzzled on July 1, when the GST hit the market.
However, once the GST settles in, its effects will reflect more clearly.
While the price tags on luxurious items may get a substantial rise, products of regular use and necessities are left untouched or comparatively cheaper by the new taxation law. The removal of cascading taxes is expected to bring down the existing expenses of a middle-class household significantly.
According to some estimates, a middle-class household is expected to save up to Rs 500-600 per month, adding up to Rs 6000-7000 a year. Not to mention these figured are indicative and the expenses of households are dependent on family needs and other variant factors.
Some estimates assess that middle-class families don’t spend much on luxurious items on a regular basis. So, the higher slab of GST is not expected to affect this portion of society. The prices of daily use products such as edible oil, spices, grains, juice, sweets, biscuits, pulses, shampoo, shaving cream and soap are going to stay the same after GST. So the middle-class only has to gain with the GST’s no tax product such as meat, fresh vegetables, natural honey, jaggery, prasadam, kumkum, bindi, Sindoor, stamps, judicial papers, printed books, newspapers, bangles and handloom etc.
With all the necessities falling under no tax or going unchanged, the middle class is expected to save some money through this transaction.
With the saving you make after the implementation of GST, you can spend the money any way you want. However, there are some things you should consider before running out for shopping. We all have times when we need money and don’t have it. Taking credit in these conditions only makes it worse.
Saving For Emergencies
You can use this money to save up for those conditions. Use this money to form a contingency fund. There are a lot of options out there specifically for these situations. The interest rates are really lucrative. If you already have one, add more to it. Saving money can never hurt.
You can also use this money to invest in mutual funds and get a corpus of above Rs 8 lakh with your Rs 500 saving in 20 years. You can also choose a different scheme depending on your savings and time you need the money.
Pay back loans
As fun as it is to get interests on your savings, it’s not the same when you are the one giving it away. You can also use your money to increase your installment on any of your current loans. The interest rates on loans can be changed anytime. Payback before the interest rate goes high.
If you don’t have a life or health insurance cover, which you should always have, you can use this extra money to buy one. Start with a small cover and move forward with higher ones. Health insurance is really helpful in case of sickness while life insurance covers the family’s immediate expenses after you.
Buy something you want
As responsible you can be by doing anything above everyone have something they want with all their heart. You can buy whatever you want without disrupting your financial condition. The interest rates are low and EMIs are rather handy.