The Burden of GST on Everyday Life

Welcome to today’s story about a silent struggle faced by millions—the middle class and their daily dance with GST and taxes.

Imagine this: you’re at a movie theater, ready to enjoy a simple bag of popcorn. But did you know the taxes on that popcorn depend on its flavor? Plain salted popcorn is taxed at 5%, but if it’s branded, you pay 12%. Add a caramel coating, and now you’re shelling out 18% in taxes. What was once a simple snack now reflects the complexity of our tax system.

Let’s move to another common aspiration—owning a car. For those dreaming of upgrading their old vehicle or switching to an electric car, here’s a reality check. Selling a used car? That profit gets taxed at 18%. Want to go green? New electric cars get a relatively lighter 5% tax, but if you’re eyeing a second-hand electric vehicle, the GST shoots back up to 18%.

But the biggest story lies in the heart of urban India. The middle class—the backbone of our economy—is quietly shrinking. With FMCG giants like Hindustan Unilever and Nestlé reporting slumps in growth, it’s clear that the demand for basic products like packaged foods, beverages, and skincare is dropping. Urban families, once the driving force behind these industries, are cutting back, grappling with rising costs and stagnant salaries.

And it’s not just groceries. Owning a home, a fundamental middle-class dream, is slipping further out of reach. In Gurugram, housing prices have skyrocketed by 160% over five years. A modest two-bedroom apartment now costs a fortune in metro cities, forcing families to reconsider their aspirations.

Meanwhile, the cost of living continues to climb. From the fuel we put in our cars to the phones we carry in our pockets, the price tags in India often rival or exceed those in wealthier countries, thanks to heavy taxation. For example, an iPhone 16 costs nearly 40% more in India compared to the US—a price hike driven primarily by taxes.

This growing gap between aspirations and affordability paints a stark picture. The middle class, once touted as India’s economic engine, now finds itself taxed at every turn, with fewer opportunities to save or invest in a brighter future.

Indian Economy: Facts and Figures

  1. GST Breakdown

    • Basic essentials like pre-packaged flour, paneer, and curd are taxed at 5%.
    • Medicines and insurance premiums have risen due to GST rates of 12% and 18%, respectively.
    • Luxury items, including SUVs and caramel popcorn, attract GST as high as 28%.

  2. Taxation Trends

    • In FY 2024-25, individuals are expected to pay ₹11.56 lakh crore in taxes, surpassing the ₹10.42 lakh crore from corporations.
    • GST contributes significantly to indirect taxes, making daily necessities more expensive for the middle class.

  3. Housing Costs

    • Average home prices in India’s top 7 cities increased by 23% in a single year, reaching ₹1.23 crore.
    • Gurugram saw a staggering 160% rise in housing prices over five years.

  4. Fuel and Daily Expenses

    • Taxes account for over 50% of the cost of petrol and diesel.
    • India’s per capita income is $2,700 (₹2.3 lakh), compared to $86,600 (₹74 lakh) in the US.

  5. Corporate Profits vs. Salaries

    • Indian corporates reported their highest profits in 15 years in 2024, yet salary growth has been stagnant.

  6. Economic Inequality

    • The top 1% of Indians own 40.6% of the nation’s wealth, while the bottom 50% share only 3%.

Conclusion:
The numbers tell a story of disparity and challenge. India’s middle class continues to grapple with a system that demands more while offering less in return. To truly empower this vital segment of society, systemic reforms and equitable taxation are not just necessary—they are urgent.