The successful implementation of GST will make a revolutionary impact on the economy of India. It might benefit some, and some might have to change their strategy to be successful. GST being one tax for Central and state will give rise to transparency in the functioning of the nation. It will lead to ease of business transactions and will reduce logistics costs across sectors. The impact of GST on various industries can be observed as under:
Real estate:Including the industry of real estate within the ambit of GST will result in less malicious acts in this sector. Tax evasion will be reduced as a consequence of the same. GST being one tax will solve the present issue of collecting VAT on excise duty. GST might have a negative impact also by increasing the cost for the consumers in case the output of real estate is exempted from it.
Tourism and hospitality:Presently, multiple taxes are levied by the Centre and states for the tourism and hospitality industry. GST will replace all these taxes. GST might change the input credit availability for services used to renovate and construct the hotels and resorts. It is hoped that GST will simplify the procedures. The present benefits from Foreign Trade Policy might not be available and that might increase the costs.
Education:Currently, education sector enjoys many exemptions and benefits. It is also a part of the negative list of services, excluding the industry from the service tax ambit. If the exemptions are retained, similar situation is likely to continue in this sector. However, for real benefits to this sector, the taxes to be paid on inputs must be eliminated.
Financial Services: GST might result into increasing the cost of the banking and financial services. A service tax of 15% is levied on financial services at present. With the assumed GST tax rate of 18% to 20%, it can be said that services are going to get expensive. A lot many compliance issues might also arise with the application of GST. The banking sector recommends that GST must not cover financial and banking services. It can be said that levy of GST on these services will be too challenging.
Hence, GST will arise as transformative step, changing the whole indirect taxation system of India.