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GSTimpactacrosssectors:Takealookatthewinnersand
losers
ByETBureau|Updated:Aug04,2016,11.32AMIST PostaComment

GSTwillturnIndiaintoonecommonmarket,leadingtogreatereaseofdoingbusinessand
RELATEDVIDEO
bigsavingsinlogisticscostsfromcompaniesacrossallsectors.Somecompanieswillgain
moreastheGSTratewillbelowerthanthecurrenttaxratestheypay,otherswillloseasthe
ratewillbehigherthanthepresenteffectiverate.WhiletherateofGSTisyettobedecided,
industryobservershaveassumedan18%raterecommendedbyagovernmentpanelin
makingtheirimpactcalculations.ETlooksatthelikelyimpactacrosssectors.

TECH
Positive
GSTwilleliminatemultiplelevies.Itwillalsoallowdeeperpenetrationofdigitalservices.
GSTpassedafteradecade:Politicalleadersreact
Negetive
ITcompaniescanhaveseveraldeliverycentresandofficesworkingtogethertoservicea
Taxplanning:
singlecontract.WithGST,companiesmightrequireeachcentretogenerateaseparate HowtocompletealltaxworkbeforeMarch31
invoicetoeverycontractingparty.Dutyonmanufacturedgoodsisgoingtogoupfrom
existing1415%to18%,whichmeansthecostofelectronicsfrommobilephonestolaptops
willrise.

Alsoread:GSTtoboostpositivesentiment:SunilKanoria,Assochampresident

FMCG
Positive
Companiescouldgeneratesubstantialsavingsinlogisticsanddistributioncostsastheneedformultiplesalesdepotswillbeeliminated.
FMCGcompaniespaynearly2425%includingexciseduty,VATandentrytax.GSTat1719%couldyieldsignificantreductionintaxes.
Warehouserationalisationandreductionofoveralltaxrates,isexpectedtogeneratesavingwhichcouldcumulativelyrangebetween200
300bps.
Keybeneficiaries:HindustanUnilever,Colgate,GSK,AsianPaints

Negative
Iftherecommended40%"sin/demerit"GSTforaeratedbeveragesandtobaccoproductsislevied,thenpricesmayincreasebyover20%.
Foodcompanies:manyseeincreaseineffectivetaxasmanycompaniesenjoyconcessionalrateofexcise.

ECOMMERCE
Positive
GSTwillhelpcreateasingleunifiedmarketacrossIndiaandallowfreemovementandsupplyofgoodsineverypartofthecountry.Itwill
alsoeliminatethecascadingeffectoftaxesoncustomerswhichwillbringefficiencyinproductcosts.

Negative
Thetaxcollectionatsource(TCS)guidelinesintheGSTregimewillincreaseadministration,documentationworkloadforecommercefirms
andpushupcosts.

TELECOM
Positive

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3/21/2017 GSTimpactacrosssectors:TakealookatthewinnersandlosersTheEconomicTimes

Handsetpriceslikelytocomedown/evenoutacrossstates.Manufacturersarealsolikelytopassontoconsumerscostbenefitstheywill
getfromconsolidatingtheirwarehousesandefficientlymanaginginventory.Forhandsetmakers,GSTwillbringineaseofdoingbusiness
astheymaynolongerneedtosetupstatespecificentitiesandtransferstockstothemandinvestheavilyintologisticsofcreating
warehousesineachstateacrossthecountry.

Negative
Callcharges,datarateswillgoupiftaxrateintheGSTregimeexceeds15%.Towerfirmswon'tbeabletosetofftheirinputdutyliabilities
ifpetroproductscontinuetostayoutsideGSTframework.NegativeforBhartiAirtel,IdeaandRelianceComm.

AUTOMOBILES
Positive
Onroadpriceofvehiclescoulddropby8%,asperareportbyMotilalOswalSecurities.Lowerpricescanbeconstruedasindirect
stimulustoboostvolumes.Keybeneficiaries:MarutiSuzuki,M&MEicherMotors'marginsmayexpand.

Negative
Demandforcommercialvehiclesmaybehitinthemediumterm.GSTwillsubsumelocaltaxes,reducetimeatcheckposts,easelogistics
hurdles.Withfleetproductivityincreasing,operatorsmaynotfeeltheneedtoexpandmidterm.

MEDIA
Positive
DTH,filmproducersandmultiplexplayersareleviedservicetaxaswellasentertainmenttax,GSTwillbringmajorchangeanduniformity
inbusinesses.Taxescouldgodownby24%.
Multiplexchainswillsaveonrevenuesastherewillbeamoreuniformtax,unlikecurrenthighrateofentertainmenttaxleviedbydifferent
states.Itmaylowertheaverageticketprice,andincreasethefootfallsinmultiplexes.
GSTwillbeabigboontofilmproducersandstudiosthatcurrentlypayservicetaxonmostoftheircost,butcannotchargeinputcrediton
creativeservices(paymentstoartistsetc)astheyfallunderthenegativelist.UnderGST,theywillbeabletoclaimcreditoftheseservices
also,whichwillhelpisloweringtheoverallcost.

Keybeneficiaries:DishTV,PVR.

Alsoread:ExpertssayGSTcanberolledoutinFY18

INSURANCE
Negative
Insurancepolicies:life,healthandmotorwillbegintocostmorefromApril2017astaxeswillgoupbyupto300basispoints.

AIRLINES
Negative
Flyingtobecomeexpensive,asservicetaxwillbereplacedbyGST.Servicetaxonfarescurrentlyrangebetween6%and9%(depending
ontheclassoftravel).WithGST,theratewillsurpass15%,ifnot18%,effectivelydoublingthetaxrate.

CEMENT
Positive
Theeffectiverateoftaxforcementcompaniesisnow25%.IfGSTratesarefixedat1820%thentheoveralltaxincidencewillbelower
GSTISexpectedtoleadtosavingsintransportationcost,whichcurrentlycomprisesupto2025%oftotalrevenue.Onecommonmarket
willbringdownthenumberofdepotsinthecountry.Ultratechstatesthatitsdepotswillcomedownto100from550atpresent.

Keybeneficiaries:PanIndiaplayerssuchasUltraTech,ACC,AmbujaandShreeCement.

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3/21/2017 GSTimpactacrosssectors:TakealookatthewinnersandlosersTheEconomicTimes

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