Sector-Wise GST Impact
- Posted on Jul 11, 2017
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- By Dhruv
What will be the GST impact sector-wise?
As GST has been implemented and its been almost two weeks since it’s induction into our tax system, there are some speculations and questions arising in the mind of people about its impact on Indian economy.
So here is the sector-wise possible future impact of GST:
Startups:
The Goods and Service Tax has brought some good news for Indian Startups. With limits increased for registration, a Do It Yourself compliance model, free flow of goods and services and tax credit on purchases, the GST will forecast well for the Indian startup scene. Currently, in many Indian states, they have very different VAT laws which can be confusing for companies that have a pan-India presence, especially the e-commerce sector. All of this is expected to change under GST with the only sore or negative point being the reduction in the excise limit.
Freelancers:
Freelancing in India is still a growing industry and the rules and regulations for this lawless industry are still up in the air. GST will simplify the tax filing process for the freelancers as they can file their taxes online. They will be taxed as service providers, and the new tax structure will bring about integrity and accountability.
E-commerce:
One of the most rapidly growing sector in India is the E-commerce sector. In many ways, GST will help the e-commerce sector’s continued growth but the long-term effects will be particularly interesting because the model GST law specifically proposes a tax collection at source (TCS) mechanism, which e-com companies are not too happy with. The current rate of TCS is at 1% and it’ll remain to be seen if it dilutes the rapid boom in this sector in any way in the future.
Real Estate:
The real estate sector is one in all the most pivotal sectors of the Indian economy and it is playing an important role in generating employment in India. The impact of GST on real estate sector cannot be assessed properly because for the most part, it depends on the tax rates. With GST implementation, this sector will have substantial gains, as GST is going to bring the much-needed transparency and accountability. The real estate sector’s evolution under GST will also impact property owners looking to sell their assets. As the market adapts to the new tax regime, sellers will find that the clarity and reduced tax burdens can streamline transactions, making the process more straightforward. Property owners seeking a swift sale might particularly benefit from engaging with cash home buyers on Long Island, as these buyers are often able to navigate the changing landscape with greater efficiency, providing quick and uncomplicated transactions. Overall, the GST reforms promise a more transparent environment, enhancing the ease of selling properties and potentially offering better outcomes for sellers.
As the real estate landscape continues to evolve under GST, property owners seeking to sell their assets will likely experience a more favorable environment. The clarity provided by the new tax system can simplify transactions, making it easier for sellers to understand their obligations and potential costs. For those looking to expedite the sale process, connecting with a cash investor for house deals can prove invaluable. These investors are often well-versed in the current market dynamics and can facilitate smooth transactions, allowing property owners to achieve their goals efficiently. In summary, the impact of GST on the real estate sector heralds a new era of transparency, benefiting both sellers and buyers alike.
Consumer Durables:
While some companies were previously taxed at 27% as compared to 28 % under the GST regime. There are expectations that with GST making its way, there will be some increase in the prices of most consumer durable items. Market Analysts believes that there will be no significant change in the margins of the consumer durable companies post GST implementation.
Pharma and Healthcare:
The scenario for pharma and healthcare industries is expected to be beneficial due to GST. GST is going to create equal opportunities for generic drug makers, which will boost medical tourism and will also simplify the tax structure. The only matter of concern will be on the pricing structure of drugs. The GST act is going to result in affordable healthcare for all with easy accessibility.
Telecommunication:
The telecommunication sector is definitely expecting price drops after GST. Manufacturers are going to save a lot with the help of efficient inventory management and consolidated warehouses. The manufacturer of handsets will find it easy to sell their equipment as GST will simplify any interstate transactions and any transfer stocks.
FMCG:
There would be savings in Logistics and distribution costs of FMCG sector as the GST will eliminate the need for the multiple sales depot. It is expected that 17% will be the GST rate for this sector, which is lesser than the previous tax rate of 24-25% paid by FMCG. This taxes includes VAT, entry tax and excise duty, and all these taxes will be subsumed by GST.
Automobiles:
The automobile industry in India is a vast business producing a large number of cars annually, fueled mostly by the huge population of the country. Under the current tax system, there are several taxes applicable on this sector like excise, VAT, sales tax, road tax, motor vehicle tax, registration duty which will be subsumed by GST. Though there is still some ambiguity due to tax rates and incentives/exemptions provided by different states to the manufacturers/dealers for manufacturing car/bus/bike, the future of the industry will be growing good.
In a growing market where vehicle ownership is on the rise, focusing on added value through vehicle accessories becomes increasingly important. One such enhancement that can significantly impact the vehicle’s interior experience is the use of car seat covers. These covers provide an easy and effective way to maintain the aesthetic appeal and cleanliness of a vehicle’s interior, which is crucial for owners who want to keep their investment looking pristine amidst the challenges of urban and rural driving conditions. With the automotive sector booming, the focus on enhancing the in-car experience through practical accessories aligns well with the industry’s trajectory, promising added value and satisfaction for vehicle owners across India.
Agriculture
Agriculture plays a vital role in India’s economy. The Agriculture sector is the largest contributing sector the overall Indian GDP. It covers around 16% of Indian GDP. One of the major issues faced by the agricultural sector, is the transportation of agro products across state lines all over India. It is assumed that GST will solve the problem of transportation. GST may provide India with its first National Market for the agricultural goods. However, there are a lot of clarifications which need to be provided for rates for agricultural products.
- Posted on Jul 11, 2017
- |
- By Dhruv
- |
- 0 Comments
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