MOSL: GST-Rate recalibration likely-Consumers, light electrical and home building may benefit

​GST: Rate recalibration likely; Consumers, light electrical and home building may benefit

The GST Council in its 23rd meeting, which is scheduled to commence on 10th November 2017, is likely to make sweeping changes to the GST framework, with an aim to (i) ease the compliance burden for small businesses and (b) recalibrate the tax rates on many common-use goods that fall under the 28% slab. We believe that the Council might look to lower rates for items in the consumer, light electrical and home building sectors. In our view, this should positively impact companies like HUL, GCPL, Nestle, Asian Paints, Berger Paints, Kansai Nerolac, Titan, Bata, Havells, Crompton Consumer, Finolex, V Guard, Kajaria Ceramics, Somany Ceramics, Century Ply, and VIP industries, among others.

• Major overhaul in GST rates expected
• GST has consolidated all indirect taxes into a single umbrella, and categorized them into four broad slabs (5, 12, 18 and 28%), along with a cess on luxury and demerit goods such as tobacco, pan masala and aerated drinks.
• As of now, 200+ items fall in the 28% slab, which include common-use and luxury items.
• The fitment committee (a panel that proposes GST rates for goods and services) is preparing a list of items, for which rates could be reduced after assessing revenue implications.
• Our discussions with some of the tax experts highlight that the intent is to recalibrate the GST rates for (a) common-use items and (b) items manufactured by SMEs.