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Impact of GST on Various Industries: Insights and Analysis

The government added GST to the Indian Constitution through the 101st Constitutional Amendment Act, 2016. After its implementation, different industries saw both negative and positive effects based on the long-term gain it attracted. Although few industries immediately benefited, patience is the key to reaping its long-term benefits. In the following sections, we will understand GST meaning and examine its effects on different industries through insights and analysis.

GST Impact on the Real Estate Industry

The implementation has improved the real estate and property market. Property buyers can significantly benefit, as depending on their worth, they must pay 12% GST for under-construction properties, excluding registration and stamp duty expenses. Earlier, this clause applied to ready-made properties.

GST Impact on the Textile Industry

The industry of textiles and readymade clothes has benefited from GST implementation. The new tax structure offers the following advantages to the industry:

  • The GST system breaks down the industry in the Input Credit System.
  • Compared to the previous tax system, manufacturing textiles and garments is now cheaper.
  • Capital goods are eligible to benefit from input credit.
  • After the GST implementation, readymade clothes up to Rs 1,000 are free from GST. Branded clothes costing more than Rs 1,000 are taxable at 12%.

GST Impact on the Agricultural Industry

The agricultural industry significantly contributes to the country’s GDP by 16%. It has experienced the positive impact of GST, as the transportation of agricultural goods across the country has become cheaper. Since transportation is one of the most crucial issues in the industry, GST has helped India form the first national market for agricultural goods.

GST Impact on the IT Industry

Although the GST rate for services has increased to 18%, the Information Technology industry has benefited after GST implementation. Factors like the ITC reduce the sector business’s operating expenses and expand its general productivity. Major areas of GST impact on the industry are as follows:

  • Simpler administration of the tax rate
  • Eliminated double-tax effect of taxes
  • E-commerce
  • Business restructuring
  • Opportunities in creating GST software

GST Impact on the Banking Industry

With the GST introduction, the banking industry has become costlier than before. Earlier, the tax rate for banking services was 15%. However, after GST implementation, the tax rate has increased to 18%. Other effects of GST on the banking industry are the following:

  • Reliance on SGST and CGST
  • Separate bank parts need a separate registration
  • Identification of the place of supply
  • Charges for transactions between banks
  • Input Tax Credit in GST

GST Impact on Tourism and Hotels

Tourism is one of the most important parts of the Indian economy, generating significant GDP. The GST rate varies for hotels depending on the tariffs. These include the following:

  • 0% GST for tariffs below Rs 1,000
  • 12% GST for tariffs from Rs 1,000 to Rs 7,500
  • 18% GST for tariffs above Rs 7,500

GST has brought a uniform tax rate while eliminating multiple taxes, making it easier for the tourism industry to provide clarity to the customers. So, the tourism and hotel industry has significantly benefitted from GST.

GST Impact on the Entertainment Industry

The entertainment industry is another sector benefitting from GST. Before the incorporation of this tax, the government levied various taxes on the entertainment sector, including central tax, state tax, and local authorities taxes. However, GST has brought all these taxes into a single tax system ranging from 18 to 28%. Services inside the 18% GST rate include movie tickets, theatre, TV and DTH services, circus, etc. Services under the 28% GST rate include sporting events, racing, movie festivals and events, casinos, amusement parks, etc.

GST Impact on the Automobile Industry

Post-GST implementation, a unified tax system has cleared various taxes like VAT, sales tax, road tax, excise duties, etc., increasing the number of automobile deals. As a result, automobile brands have experienced massive growth after the GST introduction in India. Thus, the automobile industry is another sector benefitting from GST.

Companies falling in any of these industries must make their GST challan payment on time using the online service and benefit exponentially from the new taxation system.

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