The GST (Goods and Service Tax) is introduced in India to eradicate the tax differences and difficulties across states and to implement the single taxation across the country. GST has a comprehensive benefit to the country in the long run. However, many sectors may experience positive or adverse effects in the near term, and we are going to discuss that below.
|STATUS||TAX RATE||GOODS COVERED|
|Zero Rated||0%||Essential items including food(export, sez)|
|Merit Rated||5%||Commonly used items(spice, tea, sugar, etc.)|
|Standard Rated||12%||Bulk of goods and services which include fast moving consumer goods(smartphones, soaps)|
|Demerit Rated||28%||Refrigerator, AC and aerated drinks|
|Additional Cess||15%||Luxury cars, tobacco and aerated drinks|
Banking Sector: Currently banking institutions are paying around 15% tax, but after the implementation of GST, they are required to pay 18% tax which has a negative impact.
Pharma Sector: Same as the Banking, Pharma companies also required to pay more taxes in GST taxation which causes an adverse impact on the sector as a whole.
Logistics: The primary beneficiary of GST taxation is the logistics industry as it removes the payment of taxes in different states with different tax rate and for the interstate transportation only IGST is paid to the central government, and no separate tax payment is required to pay for state government unlike before.
FMCG: The implementation of GST reduces the tax rate for FMCG companies leaving a positive impact. However, with the additional cess on the tobacco products and aerated drinks, FMCG companies may feel some tax pressure.
Telecom: As the taxation for Telecom under GST is higher than the previous tax, it may cause some adverse impact.
Auto: Currently tax rate on cars and bikes are higher compared to the GST taxation. However, implementation of additional cess for luxury cars has some negative consequences for the segment.
Cement and Real Estate:Cement sector will have a positive impact as we have to pay less tax under the GST Taxation and Real Estate have no significant impact because of the GST.