GST Bill decoded: Many will reap benefits from biggest tax reform

Mumbai: With India moving towards a unified tax structure in the form of Goods and Services Tax (GST), it is likely to have a varied impact on sectors and companies with some getting positively impacted while others taking a hit in the form of additional tax expenditure.

According to Motilal Oswal Securities, automobile sector (two-wheeler and four-wheeler), logistics, multiplex, light electrical, media and cement sectors are likely to be positively impacted while cigarette manufacturers and pure commercial vehicle makers are expected to get adversely impacted.

It added that the roll out of GST would lead to a shift in business to organised players besides easing the logistics bottlenecks. This would be primarily on account of bridging the price differential between the organised and unorganized players by bringing the later under the tax net, leading to increase in their prices. 

“The batteries segment would benefit from shift in trade from unorganized to organized segment due to reduction in price gap in comparison to unorganized players. GST would also reduce the attractiveness of the unorganized segment (particularly in the paints, adhesives and plywood industries, where share of the unorganized segment is substantial, which would now be included in the tax net,” said Motilal Oswal Securities.  

In the capital goods sector, the light electrical manufacturers would remain a major beneficiary, as their net effective tax rate would come down from 29-30 per cent to 18 per cent once the GST is implemented. Similarly, cement manufacturers would see a benefit of Rs 300 to Rs 500 per tonne as their indirect tax rate would come down from 23-25 per cent to 18 per cent under GST.  According to ICRA, the implementation of GST would be positive for some of the port logistics players.