Impact of GST on Various Sectors in India

GST Impacts and Features

GST refers to Goods and Service Tax. It was first implemented by France in the year 1954; and after that as many as 160 Countries adopted it by the year 2016. Now, India finally adopted GST.
Previously in India we had different types of indirect taxes. Both state and centaral levied taxes separately. Like Service Tax (Tax on Services), Excise Duty (Tax on Manufacturing of Product), Customs Duty (Tax on Import and Export of Goods and services) these taxes where levied by Central goverment all together as compared to state government which could only tax on sale of Goods that too intra state sales (within the state) basically knownas Sales TAx or VAT (value added tax) and in case of iterstate sales (Sale of goods between different states in India) there was other tax known as CST (Central State Tax) which was the income of Central Government. But Now these all Indirect Taxes are combined in the form of GST (Goods and Service Tax).
GST was first introduced in India in the year 2004 by Kelkar Task Force, the task force recommended fully integrated GST on National basis. The then Union Minister P.Chidambaran, Presented GST in 2007-08 budget and announced GST would be introduced from April 1,2010. But since then GST has missed sevral deadlines. However in the year 2014 goverment showed its commitment towards GST by tabling the 122nd Constitutional Amendment Bill on December 19. Though the latest Deadline was April 1,2016 but finally on 3rd August,2016 the Bill has been passed in Rajya Sabha after a long discussion and explanations made by the present Finance Minister of India Shri. Arun Jaitley. GST bill was already passed in the Lok Sabha in May,2015. Since then it was being dragged by many political bodies not allowing the bill to be passed in Rajya Sabha.

What are the Types of GST?

There are two types of GST unified GST i.e, a single tax which is applicable throughout the country and Dual GST which levied by fedral and state government. Countries Like Brazil and Canada have Dual GST and now India also.

There are three types of GST in India
1)Central Goods and Service Tax (CGST)
2)State Goods and Service Tax (SGST),
3)Integrated Goods and Service Tax (IGST).
There will be Concurrent levy of Both CGST and SGST.GST will have dual rate structure comprising of CGST which is levied and collected by Central government and SGST which is levied and Collected by State government. And IGST refers to Interstate Sale (sale between different states in India) of goods and Service previously it was known as CST (central Sales Tsx) this was charged by cetral government.

GST Impacts and Features

How GST works?

Before GST: Firstly when a goods were produced there used to be Excise Duty on goods. Let us try to understand with a simple example there is company by name A ltd Producing a particular good say its Final Price before excise duty is Rs.100 and after Excise duty Tax which is 12.5%, now the Product price is Rs.112.5 and VAT of suppose 14.5%is charged which will amount to Rs.16 so total sale amount will be Rs.128.5 per unit. Producer A ltd has to Pay Rs 12.5 to Central goverment as it is levied by Central Government (Excise Duty) it can deduct the amount payable to central if it already paid some amount while purchasing the raw material i.e, it has paid an amount of Rs 10 for Excise Duty then it has to pay only Rs 2.5 to Central because already that Rs 10 has been paid by the person from whom A ltd. has purchased.Both Excise Duty and Service tax amount can be clamied if paid previousy by the producer A ltd. purchase of goods or getting a Service because both belong to Central Govermnent. It is basically known as CENVAT Credit.
and Rs 16 to State goverment as sale of goods i.e,VAT is levied and collected by State government and in the same we can claim the VAT which is already paid by A ltd. at the time of Purchase of raw material. and the main point here is to see that VAT(Sales Tax) is charged on total amount before VAT i.e, Inclusive of Excise duty that means there is a cascading effect i.e, tax(VAT) on tax(Excise Duty) in simple terms there is a Double Taxation.

After GST:

Now there will be a CGST and SGST where there is a treshold and limits which will be notified soon regarding which products or goods and services are charged to both CGST and SGST. In the same way as explained above regarding TAX on TAX now there will be no tax on tax as Excise duty, Service Tax, VAt and other taxes are made as One single tax though there might be two CGST and SGST we can claim deduction on the amount which we already paid for production and sale.

But Remember that CGST input (CGST which is already paid on puchase of rawmaterial or goods for further production or sale) can be claimed only agaist CGST. And SGST (SGST which is already paid on puchase of rawmaterial or goods for further production or sale) input can be Claimed only agaist SGST.

IGST refers to interstate sales previously no input was available on CST but now we can claim the input from both CGST and SGST but in the end this tax is charged by Central so if any person takes the input by State GST , the state has to refund the amount to government for this there is huge and large amount of Efficient IT Infrastructure is required.

What are the Advantages of GST?

1.Fewer Taxes
2.Broading Tax Base
3.Mitigation of Cascading Effect
4.Efficient Use of Resources
5.Creation of a Common National Market
6.Improved Compliance and revenue collection
7.Now State government can get tax on service which is at its Boom state. (previously on Central got the benifit of Service tax)

GST IMPACT ON VARIOUS SECTOR.

1) BANKS – Current service tax 15% know after GST 18% Negative.

2) CONSUMER STAPLES current tax rate 22% know after GST it’s 18% .
Positive for – Asian paints,Dabur,HUL,EMAMI
NEGATIVE for ITC & UNITED BEVERIES.

3) CONSUMER DISCRETIONARY current 15% after GST 18%
NEGATIVE for Jubilant Food works,Coffe Day ,& Restaurant Businesses.

4)MEDIA – current Tax 15% service tax and 7% entertainment Tax by State’s know After GST it will be 18%
POSITIVE for DISH TV, VIDEOCON D2H, BIG TV,

5) TELECOM current Tax 15% After GST 18% may see marginal dip in consumption as tax rise from 15% to 18%

6)AUTO INDUSTRIES current Tax 27% after GST it will be 18% .
POSITIVE for M&M, MARUTI,BAJAJ AUTO , EICHER MOTORS,ASHOK LEYLAND .

7)METALS – current TAX 18% after GST 18% no major impact

8) CEMENT – current Tax 27% altogether after GST it will be 18%
POSITIVE for Ultra tech cement,shree cement,ambuja cement etc.

9) PHARMA – current Tax 15% after GST it will be 18% .
NEGATIVE for Pharma companies.

10) REAL ESTATE – 15% to 16% Stamp duty so no major impact on REAL ESTATE companies.

11) LOGISTICS – majorly benefits to logistics sector no impact of GST
POSITIVE for – Container Corp, GATI etc…!