GST stands for Goods & Service Tax, is a consumption based tax levied on sale, manufacture and consumption on goods & services at a national level.
Seen as the panacea for removing the ill-effects of all indirect tax levied by state and central government. Exports and direct tax like income tax, corporate tax and capital gain tax will not be affected by GST. Alcohol, crude petroleum, motor spirit, diesel, aviation turbine fuel and natural gas will be out from the jurisdiction of GST. The current complex tax system will be replace by dual GST which is concurrently levied by central and state government.
- CGST (Central GST)- levied by center
- SGST (State GST) – levied by state
- IGST (Integrated GST) – levied by central Govt. on inter-state supply of goods
Software industry
This major transformation in Tax system will impact mostly software industry, will bring huge business opportunities for software providers as the companies will have to upgrade or migrate their legacy software with the updated software system with the ability to customize as per the need. As Indian companies are aggressively using various software solutions to automate, streamline and simplify their various processes like Accounting, ERP, Supply chain, Sales & Distribution etc. so GST would be the game changer for Indian software companies.
FMCG Industy
The current cascading taxation system bound FMCG companies to have warehouse or C&F agents in every state for getting input tax credit benefit. GST will provide them the freedom to design their distribution channel as per the customer demand not as per the Tax dictating policy because with GST the companies don’t have to bear CST in inter-state sale which is not credited.
Pharma Industry
The Pharma sector will be hugely benefited from the unified taxation system. Now a days Pharma companies pay import duties and state taxes on which they do not get adequate credit. With GST the process of clamming tax credit will become much simpler. The other foremost advantage will be gradually shifting of unorganized sector to organized sector. Currently major % of pharmacies comes under unorganized sector, the advent of GST will stimulate foreign investors which will redesign the supply chain strategically and effectively.
Logistic Industry
Logistics would be the industry which will be benefited substantially from implementation of GST. Huge opportunity will arrive when different industry will redesign and restructure their supply chain. With GST being a destination tax, the entire old system of warehouse management will become redundant.
Indian Economy
GST will hugely benefit the overall economy. One side it will simplify the Indian Taxation practice, enhance tax collection at the same time will increase the bottom line of companies. More Tax collection will infuse more investment, more employment which result into more GDP growth.