GST, the biggest tax reform in India since independence, also brought with it a host of questions from all the different industrial sectors in the country. While efforts have been made to help every sector grow and flourish further, the impact of GST has been as diverse as the demographics of the country.

Manufacturers, retailers, and distributors play a crucial role in the Indian economy. As a result, a common question among the masses is how the new tax regime has impacted these sectors. Let us have a look at some essential points that can shed light on the diverse impact-

GST and Manufacturers

The effect of GST on the manufacturing sector has been mostly positive. It has helped in reducing the cost of production and simplified the entire tax system. Under the previous tax regime, manufacturers were required to pay around 25%-26% more due to the cascading tax effect. GST has eliminated this ‘tax-on-tax’ regime, enabling manufacturers to pay a single, unified tax. This means that a large number of goods have got cheaper, leading to more sales.

GST Impact on Retailers

More than 90% of the retail industry in India is unorganised and works on cash payments. As GST is an online tax system which is levied at every stage where value is added to goods or services, GST impact on small retailers has been positive too. The input tax credit facility and easier entry into new markets have been some of the biggest advantages of GST for the retailers.

Impact of GST on Distributors

Distributors, along with wholesalers, play a vital role in the nation's supply chain. The GST impact on distributors and wholesalers is widely criticised as it is claimed to increase their tax liabilities. This is not quite true in most cases. It is just that the entire supply chain can be tracked online with GST and this prevents tax evasion which was widely prevalent in distribution and wholesaling in the past. While the GST impact on telecom distributors is currently considered unfavourable due to the high GST rate on telecom services, it is expected that the telecom sector would be moved to a lower GST tax bracket in the future.

Changing Face of India Under New Tax Regime

While the impact of GST on retailers, manufacturers, and distributors are not what many of the industries were expecting, the unified tax regime is more focused upon the greater good of the country. While there have been some hits and misses in the past two years, more changes are expected in the future to help each member of the supply chain.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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