GST Reforms Set to Transform Sectors and Boost Economy
The proposed GST reforms are projected to enhance sectoral growth by reducing tax rates, increasing affordability, and stimulating consumption. Key beneficiaries include the food and beverages, consumer durables, and automobiles sectors, while luxury goods and online gaming face high tax rates. Major restructuring of GST slabs to simplify the tax system is underway.
- Country:
- India
A recently released Systematix Research report has highlighted the substantial impact of the proposed Goods and Services Tax (GST) reforms on several key economic sectors. The report suggests that the reforms will result in lowered tax rates, increased affordability, and heightened consumption across various industries.
Notably, the food and beverages sector is poised to gain from a GST reduction to 5 per cent on items such as packaged foods, dairy, and snacks, likely driving significant volume growth. Additionally, consumer durables and the automotive industry are expected to experience surging demand owing to lowered GST rates on white goods and small vehicles. Other sectors, including construction materials, healthcare, textiles, and renewable energy, are also projected to benefit from these tax cuts, with improved margins and competitiveness.
However, the report cautions that luxury goods, tobacco, and online gaming will be affected by a high 40 per cent tax slab. Despite the advantageous reforms for most sectors, petroleum and luxury vehicles are set to remain untouched by the changes. The government's reform plan includes abolishing the current 12 per cent and 28 per cent GST rates, consolidating to a streamlined 5 per cent and 18 per cent system. The new tax strategy aligns with Prime Minister Narendra Modi's recent announcement of a 'big reform' in his Independence Day speech, promising a significant Diwali gift for the public.
(With inputs from agencies.)
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