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Impact of GST On Various Sectors

The document discusses the impact of GST on various sectors of the Indian economy. It finds that GST will have both positive and negative impacts depending on the sector. The technology, telecommunications, and financial services sectors may see slightly negative impacts as tax rates increase. The pharmaceutical sector's impact depends on final tax rates. The automobile, consumer durables, cement and real estate sectors are expected to see positive impacts from tax rate decreases. The textiles and media/entertainment sectors may see neutral or slightly negative impacts.

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Swathi Reddy
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249 views2 pages

Impact of GST On Various Sectors

The document discusses the impact of GST on various sectors of the Indian economy. It finds that GST will have both positive and negative impacts depending on the sector. The technology, telecommunications, and financial services sectors may see slightly negative impacts as tax rates increase. The pharmaceutical sector's impact depends on final tax rates. The automobile, consumer durables, cement and real estate sectors are expected to see positive impacts from tax rate decreases. The textiles and media/entertainment sectors may see neutral or slightly negative impacts.

Uploaded by

Swathi Reddy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Impact of GST on Various Sectors

The GST is said to have a positive impact on the economy as a whole. But when it comes to sectoral-wise
classification, the GST have both positive as well as negative impact on each of the sectors. Here are
some sectors given and its GST is given below.

Technology (Information technology and ITeS): The GST system of indirect taxation has made the duty
on the manufacturing goods from 14% to 18-20%. As a result, the prices of the software products will be
at high which will give either a neutral or slightly negative impact on the Technology Sector as a whole.
But they will be benefited through the reduction of tax and benefits of other industries and can somewhat
mitigate it.

Telecommunications: The telecommunications sector is presently paying the tax at the rate of 14% which
is expected to be increased during the GST regime. And, it is assumed to be around 18% which will be
expected to be passed over to the customers and this gives a picture that GST will adversely affect this
sector.

Pharmaceuticals: Presently, the Pharma companies are paying taxes around 15-20%. Since, there is no
clear picture of tax treatment for Pharma if it is less than 15% it would be a positive impact on the Sector
but if it is above 15% then it will cause some slight negative impact.

Automobiles: The Automobile industry is currently paying a tax rate of a range between 30-45%. And it is
expected that after GST the rate will be around 18% which will be a huge positive for the automobile
industry and which will be profitable to both the Manufacturers/dealers and the ultimate consumers. The
standard and the social status of the consumers get uplifted. There will be a huge boom in the Automobile
Industry as a result of implementation of Goods and Services Tax.
Financial Services: The Financial services such as banking, Stock Trading firms are currently paying 14.5% as
VAT which is likely to be increased to 18 to 22% in the near future under the GST regime. And the services are
likely to be costlier.
Textiles: Currently, the Textile industry is paying the tax at the rate of nearly 12.5% plus surcharges and which
varies upon the MRP of the products. Since there is no clear idea about the tax rate of this industry under the
regime of GST it is expected at the rates of 15% which will be having a moderate impact on the industry.

This moderate impact may either be neutral or slightly negative when compared to the other present system of
taxation. But they will be benefited through the reduction of cost in transportation, savings etc.

Media and Entertainment: The tax rate for the Media is around 22% as of now and since the authority for the
levy of taxes remains to be the right of the local bodies, it is expected that the cinema fares are expected to come
down after the GST regime and the cost of DTH and cable television services are likely to become costlier.
There is somewhat either neutral or slightly negative impact of GST on the Media and Entertainment Industry.

Consumer durables: The current of tax rate of this industry is around the range between 23-25%. And under the
GST regime it is considered to be lower around 15-18% which will be positive impact to this industry.

Cement: The cement industry currently pays the tax at the rate of 25% currently. And, after the GST regime, it is
expected to be fixed at the rate of 18 to 20%. This will be a major relief for the companies of that industry. And
the logistics tax also is to be reduced; it would be a double benefit for all the industries involved in
manufacturing.

Real estate: Real estate contributes about nearly 7.3% of India’s GDP and it is the largest generator of
employment immediately after IT. Real estate is said to get a positive impact under the GST regime immediately
after its implementation. It is expected that since there is a single system of Taxation under GST, all other forms
of indirect taxation will be removed which results on reduction of property prices and the cost of construction.
Thus, we can have a positive impact of GST on the Real estate sector

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