IT and Ites s
Currently IT & Ites industry is paying 14 percent of tax to the authority and subjected to 18-20 per cent after
the imposition of GST. Also an important point to notice here, that the long disputed issue of canned software taxation
will also come to end as their will no difference arise between goods and services after the GST. Overall impact could be suggested here is neutral or slightly negative.
In the current stage, the Telecom sector is paying 14 percent of tax to the governing body, but the scenario
will take the shift after the imposition of GST. The expected rate of tax will arise to 18 percent and the companies
would expect to pass the burden on the postpaid customers. There will also a lower input tax credit in this sector’s capex cost. Overall,
it seems that this regime will be negative to the industry and the sector will also be in state where they can’t pass all the tax burden to the
consumers especially their prepaid segment with lower Arpu.
Currently, automobile sector pays around 30 to 47 per cent of tax to the Indian government which is now expected
to range between 20-22 per cent, after the implementation of GST. And the overall cost cutting can be expected for
the end user by around 10 per cent. Transportation time should also be reduced
as the check points and octroi is cleared hands before. Overall GST will bring a smile into the automobile sector.
This sector will typically be neutral or negative for the companies who were enjoying tax exemptions before and falling under any concessional
tax bracket. On the other hand, it will be some how beneficial for the companies who were not exempted from any tax scheme before.
The 7th pay commission will also give demand to the sector and the warehousing will see certain boost in their profitability by 300-400 bps.
Here again, the scenario will be either neutral or negative for those
companies who fall under any concessional tax bracket or taking some kind of exemptions. The companies who are likely to
get any benefit would be Havells, Blue Star, Bajaj Electricals, Symphony, Hitachi etc.
Furnishing and Decor
In current, the sector pays above 20 per cent of his share to the tax authority, and the organized sector composes
of 65-70 of the total. The main agenda is to narrow down the tax liability of both organized and unorganised sectors and to give
more opportunities to the organized sector for being more loyal to the tax authority.
By understanding the sector, the findings are into the pocket of organized players as there are many
unorganised players who evade tax therefore creating a cost gap. After the implementation of the GST, the organized players
get the cost effectiveness and would be enjoying the benefits of large set-up. Also, the inter state flow of goods would accelerate demanding for more services of logistics.
In the current scenario, cement sector is presenting 27 to 32 per cent of their share to the tax authority.
After the rolling out of GST, this will improve the sector growth in various terms, like transportation by 20-25 per cent and
in the warehouse scheme as the rationalization would be easy in terms of state wise fragmentation and also in the transportation cost as reduced transit time.
Currently, the range is 6 to 7 per cent which the sector is paying. Somehow there is no idea about
the impact of GST on this sector but the output tax rate high reason will be negatively impacted. Therefore, various export companies,
will get some extra benefit from the duty drawback from the new GST implementation.
Here, the impact could be neutral as the sector only shares 6 per cent of his share to the tax authority.
The sector also avails the incentives in tax benefits of location wise. There are various concessional benefits
and exemptions held for this sector and will extend till the expiry of the period. The implications of GST would
also try to reduce the logistics cost and would also try to see in to the matter of inverted duty structure.
This sector is totally unknown from the imposition of GST tax regime on to him. But, the sector is
currently paying 19-21 per cent of tax to the tax body, with 4 to 5 percent of VAT in particular state, Excise duty of
12.5 percent and CST 2 percent with variable entry taxes in particular state.
Banking and Financial Institutions
The sector is paying 14 percent right now, but not on the interest part of transaction. After the GST implied, the tax horizon can
expand up to 18 to 20 percent on the fee based transactions. Overall input expense of operations will likely to increase and also hike in
the transactions of financial in nature such as loan processing fess, debit/credit charges, insurance premiums etc.