GST is like (naam to suna hi hoga) many people just heard but only a few know. Goods and Service Tax has been termed a potential game changer, the only biggest tax transformation in independent India, one that the government says is originated on the theory of “one country, one market, one tax”.
The GST, according to the Central Government, will be very advantageous to consumers, as it will cut the cost of goods and control price rises. It is also said to ease the delays in tax payments and make sure more stringent checks on the same.
Now the question is this, how the GST rates—from 5% to 28%—will change various consumer-facing sectors of the Indian Economy. A look at some of these fields and how GST will impact them.
AUTOMOBILE: Strong demand to drive away any near-term dips in car sales
GST increase the challenges the sector has faced, from demonetization and then execution of BS IV. The passenger car section is estimated to see an overall reduction in tax outgo, with bigger cars and SUV gaining from lower tax rates.
CEMENT: A minor tax relief
Opposing to the hope of cement firms, which were expecting an 18% GST rate, the sector has been sorted in the 28% slab. At the same time, cement makers will see some relief in tax payout as the effective tax rate for packaged product is at least 29-31%.
REAL ESTATE: Input cost credit to offset higher rate
Up to now, the Real Estate sector had an effective tax outgo of between 11% and 18%. With GST, the whole works contract is charged 18% tax. However, Effects on Indian Real Estate is expected to benefits from the input tax credit that is accessible under GST rules.
CONSUMER COMMODITIES: Anti-profiteering measures to keep a lid on gains
Packaged consumer commodities makers’ sales growth will be the harm in the future as trade channels have cut purchases in the run-up to GST. The overall impact is seen as neutral as rates have been cut on mass consumption items and hiked on higher-end items.
JEWELLERS: No dent to demand
The GST charge on gold jewelry has been set at 3%, lower than expectations of a 5% rate. The new charge is close to the current 2%. Therefore, it should not concern consumer buying significantly.
LUXURY HOTELS: Big chains will pay more
From a pre-GST tax rate that varied between 18% and 25% based on state taxes, GST grades hotels into four chunks based on room charges. Those with room charges below Rs1,000 will be tax-exempt, while the rest will be charged at 5%, 12%, 18% and 28%.
MULTIPLEXES: Input tax credit will bring advantages
Multiplexes are expected to benefit, primarily because of input tax credit on fixed costs such as rent and common area maintenance. The GST rate has been set at 28% for tickets price over Rs100.
TELECOM: Hit by higher tax burden
VALUE FASHION: Gets an opportunity
The 5% GST rate on clothing priced under Rs 1, 000 is estimated give a boost to the value fashion industry. Post GST, the whole value chain—raw material to the complete product—will come under the tax net.
