According to the fresh report of Crisil Intelligence, the revenue of Indian companies is expected to increase by 6-7 percent in this financial year due to the reduction in GST rates. The report further states that the anti-profiteering rules in the GST system can prevent a major increase in profit margins of companies. The rating agency said that GST cuts would have a positive impact on consumption, which is 15 percent of corporate revenue. The company further said that the time of cut is suitable. This deduction has been seen during the current global uncertainty and between the festivals and weddings of India. The expenditure increases on this occasion.
According to the report, the new GST rates will reduce the prices of products like fast-moving consumer goods (FMCG), consumer durables and automobiles. It will have a direct impact in FMCG, durables and automobiles, while some other sectors like construction will be worth seeing. The rating agency studied the impact of GST restructuring on various major areas.
These sectors will also get big benefit
- Talking about the aviation sector, no change has been made with 5 % GST on air tickets of economy class. GST on premium economy, business and first class has been increased from 12 per cent to 18. Economy class contributes 92 percent to domestic airlines’ revenue. Business and first class passenger prices are price-dominant, therefore, the increase in GST rate is expected to have little impact.
- The report on the automobile states that two-wheelers with engine capacity less than 350 cc, which have about 90 percent stake in the market, should improve 100-200 basis points in sales due to improvement in both motorcycles and scooters due to decrease in GST.
- GST deduction in Agri input sector is expected to increase business operations and increase consumer demand in specific sectors.
- The decrease in GST rate on major construction materials is expected to reduce their prices, which will encourage the construction sector. The fall in prices will reduce the construction cost of urban and rural individuals buildings (IHB), so that the owners of the house will be able to spend their savings at large or revised housing places.
- Talking about consumer durables, the maximum retail prices of air conditioner and television sets (more than 32 inches) are likely to fall by 7-8 per cent as we hope that companies will hop that companies will bring full advantage of low rates to customers.
- The report further stated that in the hotel sector, the GST rate on the rent of a room 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 wider travel and transportation sector.