GST bill, once implemented successfully, will be one of the biggest reforms in the Indian Economy in recent times. The passage of the 122nd Constitutional Amendment Bill finally floored the path for implementation of the much anticipated GST bill. Although the fine print of the legislation is yet to be laid out, the logistics industry has build up hopes that it will bring about a transformation leading to economies of scale and will be instrumental in reduction of inflation via an efficient supply chain.
The much waited and talked about topic ‘One Nation, One Tax’ GST finally got thumbs-up from Rajya Sabha on 3rd August 2016. The day India’s business techniques will change forever is expected to be around the corner. Currently, the total tax collection in the Country, Direct and Indirect put together, stands at Rs. 14.6 lac crores, with Rs. 2.8 lakh crores coming from excise and 2.1 lakh crores coming in the form of service tax. The percentage of Indirect taxes post implementation of GST is expected to increase in India since it is a developing country where Indirect taxes comprise a higher portion of total taxes. On the other hand, the role of Indirect taxes in the developed countries is significantly lower.
Only 20-25 percent items from the basket of CPI will be significantly affected by GST. Let’s take a quick tour of the same.
- Food and Beverage Industry: Food and Beverage will bear the most impact once the GST bill becomes a reality. The impact of the bill on this item is estimated to be 46 per cent of the total.
- Housing Industry: Housing Industry is expected to be the second industry which might get impacted by GST, about 10 per cent.
- Transport and communication Sector: This item from the basket is expected to face about 9 per cent of the impact.
- Clothing, Fuel and Lights: 7 per cent impact is expected on clothing, fuel and lights each.
- Health Sector: The health sector might experience about 6 per cent impact.
- Education Industry: Education is expected to be affected by almost 4 per cent.
- Tobacco and Alcohol Industry: This sector remains least affected. The expectation is about 2 per cent.
- Others: The remaining 9 per cent impact will be spread out among the other sectors.
The ones who will skip the GST impact are:
- Petroleum products.
- Entertainment and amusement taxes by Panchayat/municipality/district council.
- Consumption of liquor.
- Stamp Duty as well as Custom Duty.
- Consumption as well as sale of electricity.
GST bill is presumed to impact almost all the sectors of the Country’s economy; some will face strong impact while some not so. However, it will be interesting to see how the sectors unfold themselves under the wings of GST. It is true that a lot is going to change once the much awaited bill is finally brought to action, which in turn will benefit the Economy and the consumers in long time. The market analysts of the country are hopeful and praying for GST to shape the country of their dream.