IMPACT OF GST ON ELECTRONIC INDUSTRY
Goods and Service Tax is a new indirect tax reform which will definitely bring drastic changes in India’s economy. Under GST, India would become a common marketplace & drive uniformity and also reduce compliance cost. It will lead to cost reduction of many products and services.
GST will change the present system of production based taxation to a consumption based one. Further, the price gap between unorganized and organized sector will be reduced. Given below is a listed positive and Negative Impact of the Goods and Service Tax.
- The tax under GST regime is set to be 28%. GST may attract additional tax rate over the electronic items of about 4 to 5 percent. Earlier it was 23 to 28% with cumulative tax (excise and value-added tax). This will severely impact the electronic Industry of the nation.
- GST regime would pave a way for a simplified tax structure for goods and services. It will eliminate multiple levies.
- This will also allow deeper penetration of digital services.
- The ultimate cost of warehouses and logistics will get reduced, manufacturers will be benefitted.
- This benefit will be passed on the consumers.
- Further, Electronic products like Air Conditioner, refrigerator, Television, fan, cooler, etc. will get cheaper.
- However, the proposed rates are higher than the existing tax rates.
- This may prove detrimental to the industry and will impact the sales.
- Presently, one gets a discount on the VAT applicable as it is only on cash part.
- Under GST, if a consumer is purchasing a new electronic item for its old product, discount received will not be considered for the tax deduction.
- In current indirect taxation system consumer has to pay around 25% more than the actual cost of production and under GST regime the rate will become 18%.
SUMMARY:
| Aspects | Impact |
| Tax rate | Will Increase |
| Tax Structure | Will be Simplified |
| warehouses | Will be consolidated |
| Storage cost | Will Reduce |
| Transportation Cost | Will Reduce |
| Tax will be levied on | Will not be applicable on the rate of the discounted electronics but on the actual rate of the product. |
As of now, it is difficult to estimate the impact of Goods and Service Tax on different products. In some states like Maharashtra and cities including Mumbai will, however, see a decline as the octroi will be set off after the GST. The impact on various fields may be positive or negative.