GST rationalisation to spur consumption

PHARMACEUTICAL
E Y A N A LY S I S O N I M P A C T O F G S T R AT E C H A N G E ( TAX SLAB  Current  New ) Key impact
n Lower treatment costs,
AUTOMOBILE increased accessibility
FMCG and affordable healthcare
31% 40%
Key impact Key impact
n Lower costs for hospitals
n Relief from long-pending n Lower prices, better and diagnostic centers
disputes around GST rates Two wheelers (above 350cc) affordability 12% / n Increased challenges for
on auto components with NIL
n Higher volumes, rural 5%
a single GST slab of 18% manufacturing firms of
traction, festival boost accumulated ITC on
n Lower rates effectively 29% 18% 36 life saving drugs for account of inverted
increase disposable n Positive investor treatment of cancer, rare duty structure
28% 18% income, strengthen 12–18% 5% sentiment diseases, severe chronic diseases
Small petrol/ CNG/LPG cars n Transition planning
purchasing capacity, n Regulatory clarity needed
with engine capacity not and management for
and support broader
Two wheelers (up to 350cc), exceeding 1200 cc and of Everyday household items n Consumption and inventory and
consumption growth 12% 5%
commercial vehicles, buses, length not exceeding 4000 mm manufacturing boost in-transit stock
trucks, auto parts, ambulance, n EVs retain tax edge, but
three wheelers, road tractors reduced gap also makes 25% n Faster refunds for Formulations n No immediate plans to
12–18% or Nil exporters revive anti-profiteering
for semi-trailers with engine hybrids attractive 45% 40% (drugs / medicines)
capacity exceeding 1800 cc probes, onus on
n Compensation cess relief Way forward businesses to voluntarily
on larger cars (including Staples
Mid-size cars (Petrol) with pass on rate reduction
SUV and luxury vehicles) n Need updated billing 12% 5%
engine capacity between 1200 benefits to consumers
increases credit fungibility systems for new rates
12% 5% cc and 1500 cc and length 12% or 5% or
exceeding 4000 mm 28% 18% n Reassess MRPs, margins, Glucometers and test strips, Way forward
Way forward and product classifications ventilators, stents, surgical
n Update ERP, tax systems
Bicycle (including delivery Garments (priced at or below instruments
n Reassess pricing n Realign pricing policies
tricycles) not motorised ~2,500 or above ~2,500) n Reassess product pricing,
structures to manage 43% 40% with trade partners
and its parts, tractors, fuel MRP setting, and margin
cell motor vehicles including profitability, dealer n Advocate to the 18% 5% planning to reflect cuts
hydrogen vehicles based margins, and customer government on issues
Mid/Large HEV/PHEV 28% 18%
on fuel cell technology expectations related to inverted duty n Restructure pricing policies,
cars with engine capacity renegotiate contracts, and
n Manage inventory refunds, cess credit, anti- Thermometers
exceeding 1200 cc and of ensure timely talks on
& working capital AC, TV (less than 32 profiteering clarity, and
length exceeding 4000 mm transitional aspects
inches), dishwashers, MRP re-sticking
31% 18% n Align distribution chain in monitors, projectors relaxations. 12% 5% n Identify old stock, plan
terms of pricing,
n Plan for transitional stocks credit notes/discounts to
managing returns, 43% 40%
Small diesel cars with engine 12% or 5% or clear inventory
promotional schemes, n Update or relabel All diagnostic kits and reagents
capacity not exceeding 1500 cc compliance requirements 18% 18% n Assess the risk of ITC
packaging to meet
and length 4000 mm to minimise disruptions Mid/Large HEV/PHEV cars accumulation for imported
regulatory compliance
and disputes (diesel or semi diesel) with Footwear (priced at or below 12% 5% consignments in transit or
engine capacity exceeding ~2,500 or above ~2,500) on-hand stock, consider
n Review state incentives, 1500 cc and of length mitigation measures
28% 18% subsidies and initiate exceeding 4000 mm Job work services for
dialogue with authorities LOGISTICS pharma products
if revisions or
Small HEV/PHEV cars with renegotiations are needed Key impact
engine capacity of 1200 cc 48% 40% AGRICULTURE
n Assess the treatment of n Higher tax cash outflows
and below, and length accumulated (opt 5% Key impact
not exceeding 4000 mm abated, for logistics players
compensation cess credits Large cars exceeding engine New n Reduced cost of
no/restricted
capacity 1500 cc and of length classification production
n I-T readiness to adopt the ITC) Way forward
updated rates exceeding 4000 mm n Boost sales due to
18% / 18% n Need for transition
28% 18% 12% enhanced affordability
n Assessing impact of readiness
delayed utilisation of ITC n Increased farmer income
50% 40% n Local delivery services n Service pricing impact
accumulated on account 12% 5%
Small HEV/PHEV cars of capex n GTA services across supply chain to be n Consumer to benefit due
(diesel or semi-diesel) with evaluated for determining to overall synergy in the
n Multimodal transport (air)
engine capacity not exceeding n Focus on media and SUVs exceeding engine preferred GST rate for n Tractors value chain
1500 cc and length not advertising strategies to capacity 1500 cc and of length n Renting of goods carriage varied transportation
n Harvesting machinery
exceeding 4000 mm showcase lower prices exceeding 4000 mm n Food delivery platforms services Way forward
n Fodder
n Restructure pricing
n Baler
policies and align with
n Agricultural machinery distributors/trade
FINANCIAL for soil preparation partners, renegotiate
SERVICES 18% with input Exempt without Key impact Way forward
contracts, and ensure
tax credits input credits n Reduction in cost of insurance for consumers n Determining the timely communication on
imapct of denial 18% 5% transitional aspects to
n Denial of ITC to create cascade of taxes
n Life insurance services to individuals of input credit minimise supply chain
(covering term, endowment and Ulip) n Impact on policies issued in the past due to n Change managemnet disruptions.
inability to increase premiums n Subcomponents of tractors
n Health insurance services to individuals for new rates n Tyres and tubes of tractors n Reassess product pricing,
n Reinsurance services in relation to the n Need to review premiums for new policies n Advocacy for (including rear tractor tyre and margin planning to
two mentioned above n Transition challenges open issues or tractor tubes) reflect tax reductions