BUSINESS

GST Guessing Game: Even Without Tax Rate, Here Are Everyone's Picks For Winners And Losers

But who really wins?

04/08/2016 1:07 PM IST | Updated 04/08/2016 2:43 PM IST
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Adnan Abidi / Reuters

Biggest reform or not, let's be clear on one thing: The final GST rate is still undecided, although it is expected to not exceed 18 per cent, but no one's quite sure. On Wednesday, during the Rajya Sabha debate on the GST bill, the Union Finance Minister Arun Jaitley didn't commit to a final rate, but said the government would strive to keep it "as low as possible."

Nonetheless, that hasn't kept experts from speculating the winners and losers from the GST tax rate based on purely hypothetical calculations, and making assumptions that all the resulting cost savings for businesses will be certainly passed onto consumers. Here's a roundup of what you can expect, but keep in mind they are based on guesstimates.

Losers:

Electronics: According to Economic Times, the cost of electronics like laptops and mobile phones could go up if you assume the GST rate at 18 per cent, as the duty on these manufactured goods currently stands at about 14 per cent.

Telecom: Mint reported that "the moderate rise" in tax outgo for telco products may hit demand and revenues. In turn, that could result in marginal impact.

Soda: Aerated beverages and tobacco products could see prices increase by 20 per cent, says ET.

Airfares: As services tax on flying ranges from six per cent to nine per cent, a higher GST could make flying more expensive, according to ET.

Winners:

Automobiles: According to Mint, if we assume the tax rate falls anywhere below the sector's current 27 per cent, the sector will clearly emerge as a big winner.

Media and Entertainment: With the 27 per cent entertainment tax going away, this is pegged as a big winner, and you can probably assume going o the movies will become cheaper. Multiplexes cinemas pay around 25 per cent in taxes, so anything less than that should be seen as benefiting cinemas and multiplexes, says Mint.

Construction materials: With movement of goods becoming smoother, the tax rate on things like cement is likely to come down from 25 per cent. Now we just have to hope for honest builders.

FMCG: Widely expected to be a big winner as companies pay up to 25 per cent in VAT, excise duty and entry tax. So consumable products should become cheaper.

Maths Teachers: The lesson from all this is bad arithmetic can ruin our lives.

To be sure, smoother movement of goods across the country has its long-term economic benefits, and a simplified uniform tax rate should simplify an over-complicated indirect tax structure.

But in the absence of a final GST tax rate, we'll have to wait and watch what prices we ultimately pay and who the real winners are.

In the meantime, take your pick.

ALSO READ: What You Should Know About GST: A Quick Summary

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