The introduction of GST resulted in much criticism for the government, most of which was motivated and due to lack of understanding. The previous indirect tax system was one of the most disadvantageous tax system anywhere in the world. It allowed the centre as well as the state to levy several taxes on goods and services.

GST eliminated this inconvenience and replaced it with a single tax. But how has been the impact of GST on different industrial sectors? Let us have a look-


The growth of e-commerce in India has been extraordinary. The GST impact on e-commerce has been mostly positive and is expected to further help the industry grow. But the TCS or Tax Collected at Source under GST has not gone down too well in the industry. Currently, TCS stands at 1%.


GST impact on the pharma industry has been neutral. With GST, India has now become a level playing field for the drug makers. It has simplified the tax structure and is also improving medical tourism. However, the industry is concerned about the pricing structure and is expecting a tax respite which can make affordable healthcare available to everyone. 


The GST impact on the telecom industry has been much talked about. The industry was paying taxes in the range of 14%-15%, but as per the new tax regime, they now fall under the 18% tax bracket. While this has made taxes slightly expensive for the industry, there are benefits like savings on the logistics costs and ease of doing business. 


The textile sector rejoiced with the introduction of GST. With benefits like a break in the supply of input credit chain, reduced manufacturing costs, and input credit on medical goods,
GST impact on the textile industry has been positive. Moreover, ready-made garments under Rs. 1,000 are also exempt from paying any GST. 


Agriculture is one of the biggest contributors to the Indian GPD with around 16% coverage. Transportation of agricultural produce between states has been a major hassle for the agriculture sector. By eliminating a host of indirect taxes, GST impact on agriculture has also been mostly positive.


The GST has eliminated the need for FMCGs to have multiple sales depots, allowing the sector to experience considerable savings from distribution and logistics costs. Moreover, the GST impact on FMCG sector has brought down the tax rate in the sector from 24%-25% to 18%-20%.

As can be seen, the impact of GST on prominent business sectors in India has been positive in most cases. While GST impact on telecom distributors and a few other sectors are still considered to be negative, better reforms are expected in the future.


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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