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GST rates: Consumer sector the biggest winner in the rates announced so far

While some near-term tax gains are partly factored in, bigger gains are more structural in nature

Aditya Narain  |  Mumbai 

Aditya Narain

It’s the last lap of the (GST) rollout now. Among the main imports of the Council’s decisions are: A July 1 rollout is almost certain; tax rates announced so far are largely in line with expectations (according to media reports), with some positive surprises in edible oil, and coal, though more clarity and details are awaited; and a few key rates are still to be disclosed.
While we believe some of the near-term tax gains are at least partly factored in, the bigger gains are more structural in nature, and lie ahead.

The is the big winner in the rates announced so far (as expected), but it’s the economy and that have the biggest gains ahead.
clear winner
The Council has approved 7 sets of rules, while the remaining 2 set of rules related to transition and returns are being vetted by a legal committee. The rates for select products have been disclosed, wherein lower tax rates on products was on expected lines, but lower tax rates on coal and was a big surprise.
Structural benefits in the offing
We believe that is a structural reform and is expected to accelerate the pace of GDP growth in India, despite implementation challenges in near term. As highlighted in our earlier reports, the regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganised to organised players.
The author is the head of research for institutional equties at Edelweiss Securities