Impact of GST on Various Sectors – Tax Analysis on Different Industries in India

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July 3, 2019

Impact of GST on Various Sectors

After the implementation of the GST, we can see both its positive and negative effects on different industries. Many sectors like manufacturing, electronics, telecom, FMCG, education, banking, jewellery, tourism, logistics, IT etc. are the important part of the Indian economy. The positive impact of the GST on such sectors is seen in the form of economic development of the country.

Let’s take an overview of the impact of GST on various sectors in India.

1. Import and Export Sector

After the implementation of the GST, we can see both its positive and negative effects on Exports of goods/services will be treated as zero-rated supply under GST law. ITC (Input Tax credit) and a refund will be allowed.

Imports of goods/services will be treated as interstate supplies and are liable for IGST and BCD (Basic Customs Duty). ITC of IGST will be allowed, but ITC of BCD is not allowed under GST. Read more…

2. Real Estate and Property

We can see the positive impact of GST on property buyers. 12% GST charges of property value are liable on all under construction properties, excluding the registration charges and Stamp duty. Earlier provision is applicable on the ready property. Input tax credits will increase profit margins for developers or builders, which further transfers benefits to the Homebuyers.
18% GST rate is levied on iron, steel and bricks. Cement industry comes under 28% GST slab.  Read more…

3. Entertainment Industry

The GST rate for entertainment services varies from 18% to 28%. These tax rates are different in different states which depend on the type of entertainment service or product. The states where The entertainment service tax was higher than 28%, GST will decrease the overall cost of entertainment. Read more…

4. Hotel and Tourism

Tourism and hotel industry play an import part to grow India’s GDP.
GST rates for hotels are different according to their tariffs

  • Less than Rs. 1000 = 0% (GST free)
  • Rs. 1000 to 2500 = 12%
  • Rs. 2500 to 7500 = 18%
  • Above Rs. 7500 = 28%

It is expected that the cost of tour packages may come down due to the relief to tour operators under GST regime. 5% tax is liable on tour operators currently.

5. Logistics Industry

The logistics industry is the backbone of Indian economy and it is estimated to be worth about $200 up to 2020. After the GST, the time taking clearance process has become easy i.e less transit time. Corruption activities are reduced in logistic services. GST reduces the overall cost of logistics services and increases business revenue.

6. Banking Sector

18% GST rates levied on banking services like insurance policies, ATM transactions etc. The earlier tax rate was 15%. Banking and financial services become costly.

GST has reduced indirect taxes, i.e. Ease of doing business in the banking and financial sector Which leads to increase in business. It will increase demand for funds and digital transactions in the banking industry. Read in detail…

7. Gold Industry

18% GST rates levied on banking services like insurance policies, ATM transactions etc. The gold industry is the biggest market in the world. GST on the gold industry hits to consumers. 3% GST rate that is applicable to 10% import duty and 5%, making charges which lead to rising the jewellery prices in India. The demand for Gold may fall 50 to 70 percent. But there is more transparency in the gold industry due to the GST implementation. It will definitely turn in a positive impact on a long term. Read in detail…

8. Textile/Readymade Garment Sector

Textile industry will be benefitted through GST implementation in India.

The advantages are following:

  • Break in input credit chain supply
  • Reduction in manufacturing price
  • Input credit allowed on the capital goods

Ready-made garments up to Rs. 1000 is exempted from GST and branded garments above Rs. 1000 will be taxed at 12%.

9. IT industry

All IT services and software products, as well as freelancers, are levied 18% GST rate. Overall positive impact on IT industry of GST. Cascading effect is removed through GST implementation. IT will make changes in the process of business process. ITC under GST will Bring down the operating costs and increase the profitability of the IT industry. Continue…

10. FMCG industry (Fast Moving Consumer Goods)

FMCG sector is one of the biggest economic platforms in India. After the GST implementation, Mostly FMCG products and services are taxed under 18 to 20 percent. Lower GST rates, give Benefits to the business holder, manufacturers and consumers directly.

Click here for GST updates and more about GST impact on various sectors.

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