GST Reform: GST reform will be 'nectar' for companies, earnings will increase..

According to a fresh report by Crisil Intelligence, the revenue of Indian companies is expected to grow by 6-7 per cent this fiscal due to the reduction in GST rates. The report further states that anti-profiteering rules in the GST system may prevent a major increase in the profit margins of companies. The rating agency said that the reduction in GST will have a positive impact on consumption, which accounts for 15 per cent of corporate revenue. The company further said that the timing of the reduction is appropriate. This reduction has been seen during the current global uncertainty and amid India's festive and wedding season. Expenses increase on this occasion.

According to the report, the new GST rates will reduce the prices of products in sectors such as fast-moving consumer goods (FMCG), consumer durables, and automobiles. It will have a direct impact on FMCG, durables, and automobiles, while its impact on some other sectors, such as construction, will be worth seeing. The rating agency studied the impact of GST restructuring on various major sectors.

These sectors will also get big benefits.

Talking about the aviation sector, there has been no change with 5 percent GST on economy class air tickets. GST on premium economy, business, and first class has been increased from 12 percent to 18 percent. Economy class contributes 92 percent to the revenue of domestic airlines. Business and first class passenger prices are price-inelastic, therefore, the increase in GST rate is expected to have little impact.

The report on automobiles said that the reduction in GST on two-wheelers with engine capacity less than 350 cc, which have about 90 percent market share, should improve sales by 100-200 basis points due to improved affordability of both motorcycles and scooters.

The GST reduction in the agri input sector is expected to smoothen business operations and increase consumer demand in specific sectors.

The reduction in GST rates on key construction materials is expected to reduce their prices, thereby boosting the construction sector. The reduction in prices will reduce the construction cost of urban and rural individual buildings (IHBs), allowing homeowners to spend their savings on larger or modified housing spaces.

Talking about consumer durables, the maximum retail prices of air conditioners and television sets (above 32 inches) are expected to fall by 7-8 per cent as we expect companies to pass on the full benefit of the reduced rates to customers.

The report further said that in the hotel sector, the GST rate on room rent up to Rs 7,500 is expected to be reduced from 12 per cent to 5 per cent, which will benefit the hospitality sector and the wider travel and transportation sector.

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