There might be divided opinions with regards to the GST rollout, but now that it has been executed, all we can do now is live with it. When I woke up this morning, I resolved to conduct an exhaustive research on how GST will affect you and me - the common man
Let us see how GST will impact different sectors and in turn affect us:
Automobile Sector
With the base tax rate for the segment defined at 28% compared to the current rate of 30%, GST will have a positive impact on this sector. According to estimates, the total tax on small cars will come down to 29% from the current 31.4%, while for SUVs the tax rate will fall from 55.3% to about 43%.
Cement Sector
While cement firms were expecting a GST rate of 18%, the sector will come under the 28% slab. While it won't make a major difference, but cement firms will see some relief since the sector was categorized in the 29-31% slab prior to GST
Construction, Real Estate
Before GST, The real estate sector has an effective tax outgo between 11% and 18%. However, in the GST regime, the entire works contract will be charged at 18% but analysts say that the sector will benefit from input tax credit available under GST rules
Consumer goods
With regards to FMCG, there won't be much turbulence caused due to the implementation of GST. Around 81% of FMCG products are in the 18% or below category. Products coming under the umbrella of basic food items like Foodgrains, staples, jaggery, cereal, and milk have all been exempted from GST. Items like sugar, tea, coffee and edible oil will be levied with a concessional GST rate of 5%. Products like toothpaste, soap and hair oil, which attract a tax rate of 22-25%, will be taxed at 18% under GST. However, detergents and shampoos will fall under the higher tax bracket of 28%
Jewellery
Jewellery was subjected to a tax of 2% prior to GST. In the GST era, 3% tax will be levied on GST.
Luxury hotels
in the pre-GST era, the tax levied on hotels varied from 18% and 25% depending on the state. With the implementation of GST, taxes will be levied on the basis of hotel tariffs. Hotels having room charges with less than Rs 1000 will be exempted from tax while luxury hotels will be taxed variably 5%, 12%, 18%, and 28%
Multiplexes
Multiplexes are expected to benefit due to the input credit tax which will be applicable to rent and common area maintenance. For all ticketing cost above Rs100, GST rate has been fixed at 28%
Telecom
Telecoms will now be applicable to 18% tax compared to the previous 15% service tax.
Value fashion
Companies selling apparels worth more than Rs 1000 will now be applicable to 12% GST, forcing them to raise the prices. According to ICRA, the tax rate on apparel priced above Rs1,000 before GST was less than the 12%.
