GST Impact Analysis in India & Opinions by GST Experts
GST has included a ‘one country one tax’ system, but its effects on various industries are slightly different. The first level of differentiation will come depending on whether the industry is related to manufacturing, distribution and retail or providing services.
Impact of GST on Manufacturers, Distributor, and Retailers
GST is an increase in competitiveness and performance in the Indian manufacturing sector.
Some indirect taxes have also increased administrative costs for producers and distributors and with GST in place
Impact of GST on Service Providers
In March 2014, there were 12,76,861 service tax assessors in countries with only the top 50 countries paying more than 50% of taxes collected nationally. Most of the tax burden is borne by domains such as
1) IT services
2) Telecommunications Services,
3) Insurance Industry
4) Business support Services
5) Banking and Financial Services, etc.
Sector-wise Impact Analysis
Logistics
the logistics sector forms the Economic backbone. We can fairly assume that a well-organized and mature logistics industry has the potential to jump over the “Make In India” initiative of the Government of India to the desired position.
E-commerce
The e-commerce sector in India has grown rapidly. In many ways, GST will help sustain growth in the e-com sector but its long-term effects will be very interesting because the GST law specifically proposes a mechanism for collecting tax at the source (TCS)
Pharma
Overall, GST benefits the pharmaceutical and health care industries. This will create a balanced playing field for generic drug makers, increase medical tourism and simplify the tax structure.
Telecommunications
In the telecommunications sector, prices will drop after GST. Manufacturers will save costs through efficient inventory management and by consolidating their warehouses.
Textile
The Indian textile industry provides employment for a large number of skilled and unskilled workers in the country. This accounts for around 10% of total annual exports, and this value is likely to increase under GST.
Real Estate
The real estate sector is one of the most important sectors of the Indian economy, playing an important role in job creation in India. The impact of GST on the real estate sector cannot be fully assessed because it largely depends on the tax rate.
Agriculture
The agricultural sector is the largest sector of India’s overall GDP contribution. This covers about 16% of India’s GDP.
FMCG
The FMCG sector experienced significant savings in logistics and distribution costs because GST has eliminated the need for several sales depots.
Freelancer
Freelancing in India is still a new industry and the rules and regulations for this chaotic industry are still floating in the air. But with GST, it will be much easier for freelancers to submit their taxes because they can easily do it online.
Automobiles
The Automobiles industry in India is a big business that produces a large number of cars every year, mostly driven by the country’s large population. Under the previous tax system, there are several taxes that apply to this sector such as excise, VAT, sales tax, road tax, motor vehicle tax, registration tasks that will be classified by GST.
Startup
With increasing limits for registration, DIY compliance models, tax credits for purchases, and free flow of goods and services, the GST regime is really very good for Indian startups.
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