India has cleared the way and the wait is over for the biggest tax reform since independence in 1947. For the new Goods and Services Tax the main beneficiaries, due to be rolled out on 1st July, which includes the steelmakers and some consumer goods, at the top rate some personal care items including sanitary will be taxed, along with the appliances such as air conditioners.
Do look at the losers and the winners:-
Automakers: The impact is likely to be marginal. Different levies the vehicle already attract, which add up to 28% - the peak GST rate fixed for the sector. Gains derived from a unified tax system may still be passed on to consumers, analysts say. Maruti Suzuki India, Mahindra and Mahindra and Tata Motors could benefit.
Fast-Moving Consumer Goods: This sector is a clear winner. Includes the consumer staples like Milk, Vegetables and fruits, gains and cereals have been exempted. Of 5% the lowest rate be taxed for Tea, Sugar, Coffee and edible oil. Companies that might gain which include Hindustan Unilever, Nestle India and Dabur India.
Items of personal-care will be taxed at 28%, saving for Soaps, Hair oil, tooth paste and Soaps, which will attract an 18% levy. This might impact the Colgate-Palmolive India, Godrej Consumer Products, Marico and Gillette India. Smokers be warned: cigarettes will attract a tax of 5 percent on top of the peak GST rate of 28 percent. VST, ITC and Godfrey Phillips may pass on the higher costs.
Consumer Durables: Will attract the peak rate, which is slightly higher than the existing tax slab, the appliances like Refrigerator, Air-conditioner, and Washing Machines. Companies increase the prices to preserve margins, Nirmal Bang Equities said in a note. Whirlpool of India, Voltas and Havells India could be impacted.
Metals, Cement: Tax on coal and metal ore is a reduction to 5% will cut input costs for steelmakers, which includes the companies which are benefiting like Vedanta, Tata Steel and Hidalco Industries and JSW Steel.
Cement makers including ACC and UltraTech Cement may increase prices to offset the impact of the peak rate, though a lower tax on coal is expected to cushion the blow.
Renewable Energy: On equipment like Solar Panels and Wind Turbines a tax rate of 5% may help to keep a lid on project costs for developers such as Suzlon Energy and Inox Wind.