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The proposed Goods and Services Tax (GST) reforms are set to significantly impact various sectors by reducing tax rates, enhancing affordability, and boosting consumption, said a report by Systematix Research.
Acccording to the report, the food and beverages sector will benefit from a GST reduction to 5 per cent on packaged foods, dairy, and snacks, driving volume growth. The report further added that consumer durables and automobiles will see increased demand due to lower GST rates on white goods and small vehicles. Construction materials, healthcare, textiles, and renewable energy sectors will also gain from tax cuts, improving margins and competitiveness. MSMEs (Micro, Small, and Medium Enterprises) and hotels will benefit from structural corrections and better credit utilisation, the report added. However, luxury goods, tobacco, and online gaming face a high 40 per cent tax slab, while petroleum and luxury vehicles remain unaffected. "Overall, the reforms promote affordability and formalisation," the report added. According to government sources, the Central Government proposes to eliminate the current 12 per cent and 28 per cent GST rates, retaining only 5 per cent and 18 per cent GST rates. Government sources said as part of the initiative, 99 per cent of the 12 per cent slab is proposed to move to the 5 per cent slab and 90 per cent of items in the 28 per cent slab are proposed to move to the 18 per cent slab. They said that consumer goods kept in the 28 per cent slab are proposed to be moved to the 18 per cent slab. They also said that a new slab of 40 per cent is proposed for "sin goods" like tobbacco and pan masala. The initiative is in line with Prime Minister Narendra Modi's announcement during his Indepedendence Day Speech on Friday that people are going to get a very big gift on Diwali and the government has embarked on "big reform of GST". (ANI)
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