The Goods and Services Tax (GST) will definitely uplift the taxation system of India and would bring out a new face of economic growth in long run. Beginning on this track would be little tricky and difficult at the same time for some of us as it will take time in the transitional phase however by spreading awareness and with proper compliance of the system by every citizen, it will not be a burden. We understand that a sudden economic growth cannot be expected but this taxation system will eventually be beneficial for the economy of India although it is hard to measure the positive and negative effects of GST on different sectors so soon.
The tax rate slabs on different goods and services range from 0% to 28% considering lower rates for necessities and highest rate for luxury goods. The good news is that tax is exempted on almost 50 % of items under the consumer durable goods category including food grains, eggs, meat, milk, curd, salt, bread, fruits, vegetables, essential medicines, prasad, stamps, judicial papers, printed books, newspapers, bangles, silk and jute textiles etc.
Most benefited sectors from GST
FMCG: This will be the most benefited sector among all reason being the focus of the government on tax reduction for mass consumption products. Daily use food products like grains, dairy, cereals, etc. are exempted from GST whereas sugar, tea, and coffee are to be taxed at just 5%.
Automobiles: The manufacturing cost for cars are expected to reduce as every stage of production in this sector is coming under a single tax bracket. The GST has given a boost to automobile sector reason being at the consumption level however the favourable situation will be only to those manufacturers who are producing cars in India.
Textiles: The growth in this sector is quite visible in both domestic & international markets in the long run making it more competitive than before. In near future, we can expect more entries in this sector. GST imposed on fabric is 5 % which the traders are protesting and trying to bring it to Zero.
E-commerce: The impact of GST on this sector is expected to be positive in the long run as it promotes this marketplace model in the country and it is going to be the next BIG Industry in India.
Least benefited sectors from GST
Consumer durable: Consumer durable have become more expensive than before under the 28% tax bracket which is the highest for products like air conditioners, refrigerators, washing Machines, geysers, etc.
Entertainment: Watch movies at multiplexes are expected to be more expensive than before which varies from state to state however it will benefit multiplex owners due to provisions like input tax credit.
Oil & Gas: This sector is complying both the GST as well as the current taxation system and therefore is the least benefited sector among all. It will be difficult for the marketers as they need to pay the transmission tariffs.