So it has been almost a month since GST rolled out in the world's largest third largest economy (By Purchasing Power). It is never easy implementing a taxation roll-out about 8 months after demonetizing 86% of the currency in circulation. Owing to the fact that Demonetization led to a 6% free fall on BSE indices, GST roll-out was daunting and critical at the same time, many expected the July 1st deadline to be extended due to under-preparation.
For those of you who know the indirect tax structure in India, it was complicated as hell, India had ranked 106th in terms of ease of doing business by World Bank in 2015. Practically you had to align your goods or service on the lines of any of the Countervailing duties, Service Tax, Central Excise duties, VAT, Krishi Kalyan Cess, Swach Bharat Cess along with the list of "Babudom" coquette's to cater to. The process was always complicated with different tax fillings for each state, much paper work and considerable amount of complicated procedures.
Therefore with GST on the roll all you had to do was check your product along the catalog of 0,5,12, 18,28 tax slabs, the government listed over 20,000 products and services along with the taxation slab. The tax was then equally split between the State and Central governments. In fact the government also set-up a help-desk hotline for any questions or queries and came up with its own software for GST implementation.
The whole idea was to keep raw material based products at zero percent GST, while aligning products and services based on level of processing, cost and finished/niche products higher up the taxation ladder scale. Just as an example Fresh Milk has 0% GST, acidified milk or yoghurt has 5% GST, Butter and Cheese has 12% GST, while condensed milk had 18% GST and if you had a milkshake at Keventers you would end up paying 28% GST. There was still a lot of confusion when products or services were bundled part of different tax slabs.
The Big Day and The Punch
The markets seemed critical on July 3rd and ended up on a flat note, but gradually till Friday July 7th the markets saw a 1.5% up from the previous week. FMCG companies were the biggest benefactor from this roll-out and most of them ended up extending the tax benefits to end users by reducing prices.
Today a month after the GST roll-out all the FMCG companies including HUL, P&G, Dabur, Nestle have fared well with stocks moving up in the last 1 month.
Most of the automakers have fared well including Maruti, Tata Motors, with Eicher Motors doing exceptionally well last month.
IT Companies despite loosing out on business globally have flared well in June with Infosys, Wipro, HCL, TCS doing well.
The Good news (Prominent necessities that have become cheaper)
* Iphones/iPad's are cheaper.
* Milk, Eggs, Cheese for all those hitting gym.
* Apparel less than 1000.
* Bikes, Luxury Cars
* Economy Class tickets
* Hotel Tarrif less than INR 7500(Goa trip on the way).
As usual the price of Cigarettes and Liquor has been impacted majorly but that's fair since according to WHO the tax burden on Tobacco products and Liquor items is recommended to be at 75%.
All in all the GST impact has been positive and continues to benefit organizations, manufacturers, retailers, distributors and end consumers, despite people complaining about it. In fact that is one thing I personally love about this NDA government, the ability to take a decision and abide by a strong decision despising appeasement over enablement. Hope it helps define India as a more organized market after the note-ban, direct tax slab modification, BeNami Act.
For those of you who know the indirect tax structure in India, it was complicated as hell, India had ranked 106th in terms of ease of doing business by World Bank in 2015. Practically you had to align your goods or service on the lines of any of the Countervailing duties, Service Tax, Central Excise duties, VAT, Krishi Kalyan Cess, Swach Bharat Cess along with the list of "Babudom" coquette's to cater to. The process was always complicated with different tax fillings for each state, much paper work and considerable amount of complicated procedures.
Therefore with GST on the roll all you had to do was check your product along the catalog of 0,5,12, 18,28 tax slabs, the government listed over 20,000 products and services along with the taxation slab. The tax was then equally split between the State and Central governments. In fact the government also set-up a help-desk hotline for any questions or queries and came up with its own software for GST implementation.
The whole idea was to keep raw material based products at zero percent GST, while aligning products and services based on level of processing, cost and finished/niche products higher up the taxation ladder scale. Just as an example Fresh Milk has 0% GST, acidified milk or yoghurt has 5% GST, Butter and Cheese has 12% GST, while condensed milk had 18% GST and if you had a milkshake at Keventers you would end up paying 28% GST. There was still a lot of confusion when products or services were bundled part of different tax slabs.
The Big Day and The Punch
The markets seemed critical on July 3rd and ended up on a flat note, but gradually till Friday July 7th the markets saw a 1.5% up from the previous week. FMCG companies were the biggest benefactor from this roll-out and most of them ended up extending the tax benefits to end users by reducing prices.
Today a month after the GST roll-out all the FMCG companies including HUL, P&G, Dabur, Nestle have fared well with stocks moving up in the last 1 month.
Most of the automakers have fared well including Maruti, Tata Motors, with Eicher Motors doing exceptionally well last month.
IT Companies despite loosing out on business globally have flared well in June with Infosys, Wipro, HCL, TCS doing well.
The Good news (Prominent necessities that have become cheaper)
* Iphones/iPad's are cheaper.
* Milk, Eggs, Cheese for all those hitting gym.
* Apparel less than 1000.
* Bikes, Luxury Cars
* Economy Class tickets
* Hotel Tarrif less than INR 7500(Goa trip on the way).
As usual the price of Cigarettes and Liquor has been impacted majorly but that's fair since according to WHO the tax burden on Tobacco products and Liquor items is recommended to be at 75%.
All in all the GST impact has been positive and continues to benefit organizations, manufacturers, retailers, distributors and end consumers, despite people complaining about it. In fact that is one thing I personally love about this NDA government, the ability to take a decision and abide by a strong decision despising appeasement over enablement. Hope it helps define India as a more organized market after the note-ban, direct tax slab modification, BeNami Act.
