GST Impact on Various Industries, Impact of GST on Various Industries, Sector wise Impact analysis. Impact of GST on Indian Economy, Impact of GST on Indian Market. GST Impact on Automobile Industry, GST Impact on Real Estate Industry, Impact of GST on Transportation Industry, GST Impact on Pharma Industry, GST Impact on Textiles Industry, Impact of GST on FMCG Industry, Impact of GST on Services Industry etc. Now check More details for “Impact of GST on Various Industries, Sector wise Impact analysis” from below….
Impact of GST on Various Industries
Impact of GST on Automobile Industry
Car Segment: Current levies of Indirect taxes and Cesses on Cars varies from 30% to 45%. If standard rate of 18-20% is declared for small cars as well as 40% for luxury cars, both will be benefited. Moreover, elimination of cascading effect and offset of input tax credit (ITC) at every stage of value chain will reduce the cost. By and large, impact may be positive for car segment of automobile sector.
Commercial Segment: Reduction in transit time will increase the fleet productivity and speedy delivery of goods. Better availability of vehicles for transport services may lead to increased competition, nevertheless, change in storage and warehousing patterns may also lead to higher interstate movements of goods, so it may be a mixed bag for truck operators.
Impact of GST on Real Estate Industry
Sale or transfer of immovable property is outside the purview of GST, however, on procurement of materials for civil construction GST will be applicable and ITC of the same is not admissible. Inadmissibility of ITC may impact negatively. Hopefully, this issue will be addressed appropriately while declaring the final law. Stamp duty will continue. Work contract for commissioning of movable or immovable property shall be supply of service. Renting, leasing, licence to occupy land and building will also be supply of service. Where consideration has been received for construction of a complex or building or civil structure is without getting certificate from competent authority it shall be supply of service. The impact on service sector depends on the GST rate vis-à-vis current rate of service tax
Impact of GST on Transportation Industry
Trucks in India drive just one third of the trucks in US (280 kms vs. 800 kms), on top of that, only about 40% of total travel time is spent on driving, major time is consumed at check points and other official stoppages. A recent news indicate that Road Transport and Highway ministry is considering overhaul of around 80 border check post across the country to ensure seamless flow of goods under GST regime. Thus, ensure eliminating check points delays, higher moving time of wheels and lower transit time which will certainly boost the business, reduce inventory holding requirements, transportations cost and better asset utilisation. Distribution and warehousing patterns will improve. Impact is going to be positive on this count
Impact of GST on Pharma Industry
Impact on Pharma sector will largely depend on the rate of proposed GST vis-à-vis current rates of indirect taxes. Pharma sector generally have an inverted duty structure i.e. excise duty on raw material is around 12.5% whereas on finished goods it is around 6-7%, this results in accumulation of refund dues from government. Sector is hopeful of making refund process fast and simple, this coupled with savings in warehousing and logistics cost may anticipate a positive impact.
Impact of GST on Textiles Industry
Currently, the domestic cotton based industry is not subject to excise duty and on branded readymade garments with MRP> Rs. 1000 excise duty is 2% with abatement rate of 40% (without Cenvat) or 12.5% (with Cenvat). However, manmade fibre sector attracts a regular duty structure (with Cenvat). It is to be seen whether lower GST rates are declared for this sector, failing which this sector may have a negative impact.
Impact of GST on FMCG Sector
FMCG products have a general excise duty rate of 12.5 per cent and a VAT at around the same level. As standard GST rate is expected to be lower than this, which if passed on to the consumer will have a positive impact on this sector. At the same time, FMCG companies will save on logistics costs.
Impact of GST on Services Sector
Services sector in India is a rapidly growing sector and significantly contributing to fiscal revenues. As indicated so far, that the standard GST rate would be 18-20%, as compared to the current 15% service tax including cesses then the services viz. IT, telecom, banking, insurance, etc may witness negative impact due to increased cost of services.
Overall Impact on Indian economy
One market – The trade of country will be converted into one market as compared to numerous markets due to different tax structures in several states as of now.
Inflation – There is a general perception that GST would drive Inflationary effect in the near term because producers will increase the rates if GST rate is higher, but refrain from passing on to customer if it is lower, consequently, inflationary effect may be there.
Exports – With lower logistics cost, full offset of ITC and seamless flow of goods cost, efficiencies will be achieved and Indian products would be more competitive.
States having higher consumption to benefit
The pattern of consumption will be the criteria for accrual of tax revenues to states. Accordingly, the tax collection will go the states having higher consumption as compared to the present system of collection by manufacturing states.
To conclude, although initial teething troubles will be there in transition phase and few sectors may face the challenges, nevertheless, the degree of positive impact is much more than challenges. IT driven taxation regime, lesser manual intervention of tax authorities, positive effect on so many sectors and uniform tax structure may witness increase in GDP for Indian economy.
Must Read –
- Why GST For India
- Salient Features of GST
- Role of Chartered Accountants in GST
- Introduction of GST
- GST Definition
- GST Current Tax Structure
- Tax layers under proposed GST Model
- Filing of GST Returns
- When will GST be applicable
- List of Taxes Included in GST
