The Goods and Services Tax (GST) was a long-awaited shift in India’s indirect tax landscape. GST established a “one nation, one tax” system. Although its impact on diverse businesses varies, the cascading effect of indirect taxes is mitigated with GST implementation, causing a shift in the tax planning process.
Depending on the industry and sector (production, distribution, or retailing, or delivering a service), the first degree of distinction emerges. After conducting a detailed GST analysis, one can get the estimated effect of it. However, this is again variable to the type of industry.
GST has a different tax rate for various industries. However, there are certain domains like:
- IT and communication services,
- Banking and financial services,
- Business support services,
- The insurance industry, and so on
These industries bear the brunt of the tax load.
But with the continual reforms and improvements in the regime, there were better chances.
To understand the impact of the overall process, here is a sector-wise GST analysis:
- Logistics Sector Impact Analysis:
The logistics industry is the economic backbone of a country. We may reasonably expect a well-organized and mature business that can outperform the government’s effort. However, with the coming of GST, the landscape has drastically changed with an upward movement in logistics taxes.
India’s e-commerce business has been expanding at a rapid pace. GST will assist the e-commerce sector in developing in many ways. Still, the long-term implications will be particularly intriguing because the GST law expressly recommends a Tax Collection at Source (TCS) method, which e-commerce businesses dislike.
- Real Estate
The real estate business is one of the most critical areas of the Indian economy, contributing significantly to job creation. From the viewpoint of GST analysis, this is perhaps the most influential domain. The impact of GST on the real estate sector is difficult to measure since tax rates heavily influence it. On the other hand, the industry would reap significant gains from GST adoption since it has introduced much-needed openness and accountability to the business.
The agriculture industry is the most important contributor to India’s overall GDP. It accounts for around 16% of India’s GDP. Transportation of agricultural products across state boundaries in India is one of the critical challenges confronting the agricultural sector. The GST will address the transportation problem.
On the other hand, the sector would reap significant gains from GST adoption since it has introduced much-needed openness and accountability to the business.
No matter which sector you are from, a comprehensive GST analysis can go a long way in planning and improving your tax prospects.
Also, Read – Analysis and Action with Financial Planning Tools