fbpx

GST Impact on Indian Sectors – Who are the Winners & Losers?

GST Impact on Indian Sectors – Who are the Winners & Losers?

by Sanjeev Archak

Previously we wrote about the complete list of GST rates for Goods and Services that was finalized by the GST council last week in Srinagar. The Council has broadly approved the GST rates for goods and services at nil rate, 5%, 12%, 18% and 28%. Today we will dive deep into the GST impact on the Indian sectors while mentioning the list of winners and losers, as a result, of these tax rates.

Before we talk about the impact of GST on the various sectors individually, here’s an ultimate list of the tax rates for both Goods and Services.

Nil Rate – Exempted from GST

Goods

Services

  • Any sort of unprocessed and local meat
  • Pasteurized form of milk, Separated Milk, Fresh Milk and Cream
  • Buttermilk, Unpackaged and Unbranded Paneer and Honey
  • Fresh fruits and vegetables which have not been preserved
  • Unroasted coffee beans unprocessed tea leaves
  • Unprocessed and Unbranded Fresh turmeric, Wheat, Rye, Barley, Oats, Maize, Rice, and Millet.
  • Non-aerated unprocessed Water
  • Common Salt, Kala Namak, and Rock Salt
  • Medical Products and Medicines
  • Books (printed which includes Braille books), Newspapers, Journals, Maps, Atlas, Globes
  • Tariff of Hotels priced under Rs 1,000.
  • Metro Fare, Local Train Tickets
  • Fare of Non AC Train
  • Education and activities related to it and Healthcare Services

 

5% Tax Slab

Goods

Services

  • Packaged form of Honey, Paneer, Yogurt, Fresh Cream etc.
  • Herbs, Dry Fruits, Frozen Fruits, and Veggies or used in preservative solutions
  • Processed, roasted and packaged Coffee, packaged and processed Tea
  • Processed and packaged Spices like Cinnamon Cloves, Nutmeg, Mace, Cardamom, Thyme, Bay leaves etc.
  • Mixture for making Bread, Pastry and other Bakery.
  • Carriages for disabled persons (both Motorized Carriages and Mechanically Propelled Carriages)
  • Broomsticks
  • Fare of AC Train Travel
  • Fair of Economy Air Travel
  • Cab Fare (includes Ola, Uber)

 

12% Tax Slab

Goods

Services

  • Frozen and Packed Meat Items
  • Butter and Cheese
  • Namkeens, Bhujia, and other such edible items
  • Washing Detergents.
  • Books for Entertainment and Education (Printed on illustrated paper)
  • Mathematical and Geometry boxes, Colors Boxes, Pencil Sharpeners
  • Utensils, Sewing Needles, Kerosene and LPG Stoves
  • Household articles made up of Iron, Steel, Copper and Aluminum
  • Blades and Paper Knives
  • Telephones (both Cellular Network and Wireless Networks)
  • Sports Goods, Toys, Combs, Hair Pins, Pens, Pencils, Crayons, Tampons, Sanitary Napkins, Clinical Diapers.
  • Tariff of Non AC hotels
  • Fare of Business Class Air Travel

 

18% Tax Slab

Goods

Services

  • Refined Sugar (which includes Colors and Flavours)
  • Artificial honey
  • Cooked or Uncooked Pasta, Corn flakes, Bulgar Wheat
  • Waffles and Wafers
  • Soups, Ice Cream, Food Mixes (Instant Food Mixtures and same sort of edibles)
  • Sharbat, Soy Milk, and Soy Drinks, Fruit Pulp or Fruit Juice based Concentrates
  • Tooth Powder, Agarbatti (Incense Sticks)
  • Products made up of Plastic (like tableware, kitchenware, other household articles)
  • Electronic Toys
  • Facial Tissues, or any kind of paper related products
  • Helmets and Hats (manufactured from Textile Fabric)
  • Spectacles and its lenses
  • Tariff of Air Conditioned Hotels
  • Liquor serving Hotels and Bars
  • Tariff of Hotels ranging in between Rs 2,500 to Rs 5,000
  • Services relating to Telecom and Finance

28% Tax Slab

Goods

Services

  • Molasses, Chewing gum, Bubble gum, White chocolate (which does not contain cocoa)
  • Any sort of Chocolate and preparations which contain cocoa
  • Churn for pan, Custard Powder, Pan Masala
  • Perfumes, Beauty Products (includes sunscreen and suntan products)
  • Bathing soaps
  • Plywood, Veneered panels and similar kind of Laminated Wood
  • Mirrors or products with mirror or glass, and wood related wall coverings
  • Stoves (expect kerosene and LPG stoves)
  • Air Heaters and Hot Air Distributors
  • Primary cells and Batteries
  • Vacuum cleaners, Electric Motor, Video Games Consoles
  • Equipment for Physical Exercise, Gymnastics, and Athletics
  • Five Star Hotels which has a Tariff ranging above Rs 5,000
  • Race Club Betting
  • Consuming Films

 

Revised rates for 66 Items by the GST Council

The GST Council revised the rates for 66 items during its meeting held on 11th June 2017 in New Delhi. Some of these items include insulin, school bags, coloring books, notebooks, printers, pickles, sauces, fruit preserves, insulin, cashew nuts, cutlery, agarbattis and movie tickets.

Finance Minister Mr. Arun Jaitley, who is also the chairman of the GST Council, highlighted that the necessary revisions were made after considering the recommendations of the fitment committee.

“There were 133 representations… These were considered at length,” he further added.

The complete list of revised GST rates can be found on the Central Board of Excise and Customs website.

 

 

GST Impact on Indian Sectors – Who are the Winners and Losers?

1) Fast-Moving Consumer Goods (FMCG)

The first entry in the winner’s list is the FMCG sector. The prices of hair oil, malted beverages, toothpaste, and soaps are likely to fall by 5-6%. The prices of chocolate, skin cream, detergent and shampoo may rise. The rates for cooking oil and instant noodles remain unchanged.

List of Goods that may be Cheaper

Current Tax Incidence Under GST Companies Impacted
Soaps 24% 18% HUL, GCPL
Toothpaste 24% 18% Colgate, Dabur, HUL
Hair Oil 24% 18% Emami, Marico, Dabur, Bajaj Corp
Malted Beverages 24% 18% GSK
Cooker 15% 12% TTK prestige

 

List of Goods that may be Expensive

Current Tax Incidence Under GST Companies Impacted
Detergent 24% 28% HUL
Shampoo 24% 28% HUL, Dabur
Skin Cream 24% 28% HUL, Emami
Chocolate 24% 28% Nestle
Instant Coffee 21% 28% Nestle, HUL
AC 26% 28% Voltas, Llyod
Refrigerators 26% 28% Whirlpool
Paints 25% 28% Asian Paints, Berger, Kansal

2) Automobiles

For automobiles, the effective tax at present is around 28-31% including state VAT, central state tax (CST), excise duty and national calamity contingent duty(NCCD). All automobiles under GST will attract a 28% tax rate except tractors.

The tax rates for SUV might drop by 6-10%. Automobiles in the luxury segment might get cheaper by Rs. one lakh. In addition, cars that are lengthwise more than 4 meters will attract 15% cess.

The prices of retail are more likely to stay unaffected as per Bajaj Auto.

Before and After – Changes in Automobile tax rates



Category

Effective Indirect tax rates before GST
New rates under GST
GST rate Cess Total
Small car Petrol 32.2 28 1 29.3
Small car Diesel 33.9 28 3 31.8
Car over 4m, below 1500cc 48.7 28 15 47.2
Car over 4m, above 1500 52.1 28 15 47.2
# Ground clearance 170mm 55.5 28 15 47.2
2 Wheelers 31.1 28 28.0
2 Wheelers > 350cc 31.1 28 3 31.8
CV 31.1 28 28.0

#Car over 4m, above 1500cc

3) Home Appliances

Companies like Blue Star, Voltas, Havells, Whirlpool, and V-Guard are likely to get impacted due to high tax on air conditioner, water heater, and refrigerator. Companies like TTK Prestige to benefit as tax rates on cookers are lower. The tax rates for tiles, faucets and sanitary ware have been increased from 18-24% to 28%. This might hurt the volume growth of Kajaria, Cera, HSIL and Somany.

4) Cement

This sector might have a marginal negative impact due to the given GST rate of 28% as compared to the 24-25% effective rate at present.

5) Paints

From the present rate of 24-25%, the tax on paints has been increased to 28%. This might impact the volume growth of Berger, Shalimar, Kansai Nerolac, Akzo Nobel and Asian Paints.

6) Metal and Mining

Coal India might benefit as the duty on coal has been reduced to 5% from the current rate of 12%. This lower price will result in attracting power producers to move away from imported coal. Companies like GMDC might be a major beneficiary due to a decrease in tax rates to 5% from the current rate of 37%. For companies like Vedanta, Tata Steel, Hindalco, and JSW Steel the lower taxes on metal ores will result in lower input costs.

7) Cigarettes

The effective tax rates for Cigarettes would be around 55-60% including the GST rate of 28%.

Cigarettes and GST

Per 1000
sticks
Pre GST Post GST
Excise Duty Cigarette cess
<65mm 1681 1591+5%
65-70mm 2216 2125+5%
70-75mm 3021 2876+5%
75-85mm 4421 4170+5%
State VAT 22-25% 28%

The wide range of taxes that are prevalent today among several states will be removed by GST. This would further reduce the transportation costs as the movement of goods between several states will become easy.

 

What is your take on the GST rates? Let us know your thoughts in the comment section. For more updates on GST, stay tuned to our blogs.

Leave a Reply

Your email address will not be published. Required fields are marked *