GST has been devised to launch the concept of one nation and one tax. However, the effect of the tax on the industries is different. The level of differentiation will be determined by the service provided by the industries. Whether it is manufacturing, retailing or distributing would decide what kind of GST will be charged from the industry.
The Impact on Retailer, Manufacturers, and Distributors
GST would likely boost the competitiveness along with the performance of the manufacturing industry of India. Lack of exports and high spending on infrastructure are the concerns of the industry. The indirect taxes have added to the expenditure of manufacturing industry. Through GST such challenges can be amended, hopes the GST council. The burden of compliance would ease, and the industry would be able to grow without any trouble.
GST Impact on Service Providers
On March 2014, near about 12, 76,861 assesses in the country. Among this number only 50% paid taxes. The majority of the tax had been paid by the IT industry, insurance industry, banking, and finance industry and the telecommunication industry. These are panned India businesses. These work in a unified market. Though they would experience less compliance burden, there would no significant change in the industry even post GST implementation.
Impact Analysis Based on Different Sector
Logistic – India is a vast country where logistic plays a significant role in the growth of an economy. The well organized logistic industry has the capability to leapfrog the government initiative Make in India and take it to the desired position.
E-Commerce – This sector is growing with time.GST implementation will help e-com sector’s steady growth. However, the result ahead would be interesting as GST proposes a collection of tax at source mechanism. The e-com companies are not happy with this decision.
Pharma – At the inception, it has been hoped that GST would benefit the pharma industry immensely. The unified tax would create a level field for the drug makers. It will boost the medical tourism while simplifying the structure of tax system. In case there is any worry in the sector it is connected to the pricing. The healthcare industry is looking forward to relief from the tax rate.
Telecommunication – In this sector price will come down as expected. Through efficient management, the manufacturers would save a lot of money. They would save money by consolidating the warehouse as well. After GST the sellers would be able to sell the handsets easily.
Textile – The textile industry offers employment to both skilled and unskilled workers. This industry contributes at least 10% of annual export. The value is about to increase after GST.
Real Estate – Real estate sector is an important sector. It plays a great role in offering employment. The impact of GST on this sector is challenging to assess fully. The sector depends on the rate of tax.
Agriculture – In overall GDP agriculture sector is a significant contributor. This sector covers approximately 16% of the GDP. Transportation is one of the major issues of this sector. It is expected that GST would resolve the problem related to transportation.
FMCG – This industry would be able to get logistic and distribution cost saving after GST. The unified tax would remove the requirement for multiple sales. The rate of GST in this sector is expected to be 17%. This is way too lesser than the 24%. This one includes VAT, entry tax and excise duty.
Freelancers – This industry is still chaotic in the country. With GST, it will be easy for the freelancers to file tax as the task can be performed online.
Automobile – This is a huge business of the country. It produces a large number of vehicles. Under the previous tax system, there had been too many taxes involved in this industry. GST would replace most of these taxes.
Startups – The VAT law has been complicated and con fusing for the start-ups. It took a lot of effort to understand this tax law. This is expected to take a new turn with GST. The unified tax system is also a simple one which the startups can deal with.
Banks & Financial Institutions – The banks and other financial institutions would see a significant shift in the business after GST. Owing to the work nature of the sector, it can be said that GST will be difficult to implement here.