Tax on Goods and Services (GST) is called the potential to change the game, only the major tax reforms in independent India, the government says, is based on the concept of “one nation, one on the market, one burden.
What is yet to be seen is how GST rates from 5% to 28% will affect the various consumer-oriented sectors of the Indian economy. Let’s look at some of these sectors and how GST will affect them:
- 1 GST impacts on Indian Economy Gold, Auto, Real estate and retail sectors
- 1.1 GST on CEMENT: A marginal tax relief
- 1.2 GST on CONSUMER GOODS: Anti-profiteering measures to keep a lid on gains
- 1.3 GST Impact on JEWELLERS: No dent to demand
GST impacts on Indian Economy Gold, Auto, Real estate and retail sectors
GST adds to the challenges faced by the demonetize sector and consequently to implementing stricter emission standards. The passenger car segment is expected to see total tax cuts for larger cars and SUVs benefiting from lower tax rates.
ICRA Ltd has a total tax on small cars estimated at 29% of the current 31.4% while the SUV tax rate of 55.3% falls to about 43%. In the near future, however, traders will reduce stock levels, which are expected to affect sales growth. The bright spot is that the growth prospects are robust and analysts expect growth of 8-12% in FY18 is expected to be for passenger cars and dual cars.
According to ICRA, GST will have a significant impact on sales of commercial vehicles. The basic rate for the segment is 28%, compared to the current 30%.
GST on CEMENT: A marginal tax relief
Contrary to the expectation of cement plants hoping for the GST rate to 18%, the industry is divided into 28% -plaque. However, cement producers will be slightly free to pay taxes because the effective tax rate for packaged cement is in any case 29-31%.
On commodity front taxes on coal, limestone and coal reduced to 5%. At present, however, the fuel of many cement plants has a higher percentage of imported petroleum coke. Meanwhile, the clean energy of Cess on Coal continues and the license fees of limestone countries.
Given the already pressing demand and uncertainty about the impact of GST, prices are unlikely to grow in the short term.
GST on CONSTRUCTION, REAL STATE: Input cost credit to offset higher rate
Meanwhile, construction, including real estate, had an effective tax uitgawe between 11% and 18%. This varies depending on the nature of the contract, the tax service applies to the provision of services and various taxes on products used in the construction industry.
For example, construction of roads, dams and irrigation projects has received tax exemption services. Among the GST, the full employment contract is filled with 18% of the burden. However, despite the higher prices, the sector is likely to benefit from the GST-enabled discount on input tax. This is only partly available under the current regime
GST on CONSUMER GOODS: Anti-profiteering measures to keep a lid on gains
Growth in the sale of consumer goods packages will be hit in the near future as trading channels have fallen pre-eminently to GST purchases. The overall impact is perceived as neutral because rates are cut at mass supply points and stopped for higher products.
Income tax rebate on the purchase of goods and services, such as advertising and logistics, is expected to offset higher prices. Anti-Ring Rules say profit profits from lower taxes and tax credit input to be passed on to consumers, limiting any immediate gains due to GST.
The problem in the medium term is how exceptions are treated in the field. In the long run, organized companies are expected to participate in them; Reorganized production and distribution will lead to greater efficiency and lower costs.
GST Impact on JEWELLERS: No dent to demand
The VAT rate is set at 3% for gold jewelry, below 5%. The new rate is close to the current 2%. Therefore, consumers should not affect their ability drastically. In addition, the tax at the expense of jewelery is reduced to 5% from 18% in advance. This should provide some relief because the tax is levied on buyers and is beneficial to the extent of demand.
GST on LUXURY HOTELS: High-end chains will pay more
The GST rate of the GST tax, which ranged between 18% and 25%, based on state fees, is based on the price of GST Hotel Four Buckets. Those with a room speed below RS1,000 will be relieved from the load even if the rest is applied to 5%, 12%, 18% and 28%.
The highest 28% slept in the city with more than Rs7.500 room rates. Thus, high-end luxury brands will pay more compared to the level before GST. Hotels can pass part of the costs because there is still insufficient demand in these categories. Over the past two quarters, tourists have higher foreign arrivals and increased occupancy rates on average by 77% of Basin-India.
MULTIPLEXES: Input tax credit will bring benefits
Multiplexes will benefit from the expected, mainly due to the import tax on fixed costs such as rental and maintenance of common areas. The VAT rate is 28% of the ticket price more than the RS100 cost. This is higher than expected industry.
However, the segment of food and beverages (F & B) pulls out 12-40% below GST, depending on the composition of F & B products. However, it is expected that the negative impact of GST is offset by tax on the input of the loan. It is generally expected that the number of ICRA Ltd. The operating margins of individual industrial entities will increase by 2.5-2.8%.
TELECOM: Hit by higher tax burden
Telecoms companies that have been weighted at high taxes and charges now have to pay an additional 3% load with the transition to GST. A 15% load service previously used for telecommunication services. Tariff customers see about 2.6% added to their gross account.
But established companies such as Bharti Airtel Ltd and Idea Cellular Ltd. Will probably involve additional costs for many of your prepaid tariffs. On the other hand, the availability of import tax will reduce the operating costs and capital expenditures. This means that the impact on profit margins may be small.
GST on VALUE FASHION: Gets a leg-up
It is expected that a 5% VAT rate is expected to wear under RS1000, giving value to the value of a fashion company. Post-GST is a full-fledged raw material for the finished product and falls into the tax network.
According to Ambit Capital Pvt. Ltd. will reduce the price difference between non-organized and organized companies in the industry. Also, enter credit to reduce the cost of organized companies. On the other hand, in a clothing segment that is priced at RS1000, a 12% VAT rate can force companies to raise prices. According to calculations by ICRA Ltd., which is the effective tax rate for garments over RS1000 now less than 12% GST rates.