Impact of GST On Manufacturers, Distributor, and Retailers

GST has brought in ‘one nation one tax’ system, but its effect on various industries is
slightly different. The first level of differentiation will come in depending on whether the
ituring, distributing and retailing or is providing a service.
Impact of GST on Manufacturers, Distributor,

and Retailers
GST is a boost competitiveness and performance in India’s manufacturing sector.
Declining exports and high infrastructure spending are just some of the concerns of
this sector. Multiple indirect taxes had also increased the administrative costs for
manufacturers and distributors and with GST in place, the compliance burden has
eased and this sector will grow more strongly.
But due to GST business which was not under the tax bracket previously will now have
to register. This will lead to lesser tax evasion.
Impact of GST on Service Providers

As of March 2014, there were 12, 76,861 service tax assessees in the country out of
which only the top 50 paid more than 50% of the tax collected nationwide. Most of the
tax burden is borne by domains such as IT services, telecommunication services, the
Insurance industry, business support services, Banking and Financial services, etc.
These pan-India businesses already work in a unified market and will see compliance
burden becoming lesser. But they will have to separately register every place of
business in each state.
Sector-wise Impact Analysis
Logistics
In a vast country like India, the logistics sector forms the backbone of the
economy. We can fairly assume that a well organized and mature logistics industry
has the potential to leapfrog the “Make In India” initiative of the Government of India
to its desired position.
E-commerce
The e-commerce sector in India has been growing by leaps and bounds. In many
ways, GST will help the e-com sector’s continued growth but the long-term effects will
be particularly interesting because the GST law specifically proposes a Tax Collection
at Source (TCS)mechanism, which e-com companies are not too happy with. The
current rate of TCS is at 1%.
Pharma
On the whole, GST is benefiting the pharma and healthcare industries. It will create a
level playing field for generic drug makers, boost medical tourism and simplify the tax
structure. If there is any concern whatsoever, then it relates to the pricing structure (as
per latest news). The pharma sector is hoping for a tax respite as it will make affordable
healthcare easier to access by all.
Telecommunications
In the telecom sector, prices will come down after GST. Manufacturers will save on
costs through efficient management of inventory and by consolidating their
warehouses. Handset manufacturers will find it easier to sell their equipment as GST
has negated the need to set up state-specific entities, and transfer stocks. The will
also save up on logistics costs.
Textile
The Indian textile industry provides employment to a large number of skilled and
unskilled workers in the country. It contributes about 10% of the total annual export,
and this value is likely to increase under GST. GST would affect the cotton value chain
of the textile industry which is chosen by most small medium enterprises as it
previously attracted zero central excise duty (under optional route).
Real Estate
The real estate sector is one of the most pivotal sectors of the Indian economy, playing
an important role in employment generation in India. The impact of GST on the real
estate sector cannot be fully assessed as it largely depends on the tax rates. However,
the sector will see substantial benefits from GST implementation, as it has brought to
the industry much-required transparency and accountability.
Agriculture
The agricultural sector is the largest contributing sector the overall Indian GDP. It
covers around 16% of Indian GDP. One of the major issues faced by the agricultural
sector is the transportation of agri-products across state lines all over India. GST will
resolve the issue of transportation.
FMCG
The FMCG sector is experiencing significant savings in logistics and distribution costs
as the GST has eliminated the need for multiple sales depots.
Freelancers
Freelancing in India is still a nascent industry and the rules and regulations for this
chaotic industry are still up in the air. But with GST, it will become much easier for
freelancers to file their taxes as they can easily do it online. They are taxed as service
providers, and the new tax structure has brought about coherence and accountability
in this sector.
Automobiles
The automobile industry in India is a vast business producing a large number of cars
annually, fueled mostly by the huge population of the country. Under the previous tax
system, there were several taxes applicable to this sector like excise, VAT, sales tax,
road tax, motor vehicle tax, registration duty which will be subsumed by GST.
Startups
With increased limits for registration, a DIY compliance model, tax credit on purchases,
and a free flow of goods and services, the GST regime truly augurs well for the
Indian startup scene. Previously, many Indian states had different VAT laws which
were confusing for companies that have a pan-India presence, especially the e-com
sector. All of this has changed under GST.
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ALL ARTICLES
1. Goods and Services Tax Council | GST
Let us understand the the functionalities of the GST Council.
2. Impact of GST on NGOs and Charitable Trusts
Let us take a look at how the implementation of GST affected NGOs and charitable
trusts.
3. Impact of GST on Rent
Let us look at the impact of GST on commercial and residential rent.
4. Impact of GST on Shipping Charges
Let us look at the impact of implementation of GST on shipping charges.
5. GST Impact on Gold & Gold Jewellery Prices
Let us look at the impact of implementation of GST on gold and gold jewellery and gold
ornaments.
6. Goods Transport Agency under GST
There's a lot of confusion regarding the treatment of Goods Transport Agencies under
GST. Read to find out whether GTA is liable to register and pay GST.
7. How will GST Impact Your Personal Finances?
Impact of GST on your finances will have a mixed effect. For many items, there is a
reduction in taxes.
8. Impact of GST on Cab Services
Impact of GST on cab services is beneficial for passengers as it has reduced travelling
costs. However, GST results in increase in the lease payments.
9. Impact of GST on IT Sector
Rate of GST on IT sector has increased to 18% but the IT industry will enjoy an increase
in sales thanks to demand of GST software.

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GST has brought in ‘one nation one tax’ system, but its effect on various industries is

Impact of GST on Manufacturers, Distributor,

Impact of GST on Service Providers

Simplify Your GST Filing & Invoicing

 Know tax payable before uploading to GSTN

Start 30 Days FREE Trial

Let us understand the the functionalities of the GST Council.

2. Impact of GST on NGOs and Charitable Trusts

3. Impact of GST on Rent

Let us look at the impact of GST on commercial and residential rent.

4. Impact of GST on Shipping Charges

Let us look at the impact of implementation of GST on shipping charges.

5. GST Impact on Gold & Gold Jewellery Prices

6. Goods Transport Agency under GST

7. How will GST Impact Your Personal Finances?

8. Impact of GST on Cab Services

9. Impact of GST on IT Sector

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