I was reading about GST and its impact on several sector’s but as a investor how its benefited to me? Is it a good move for brokers ?
GST is good for everyone. It removes tax on tax.
Over all cost of products comes down.
Very good for FMCG and LOGISTICS stocks .
Number of warehouses will come down so better profitability for them.
For Manufacturing sector present tax is given below.
Product cost Rs. 1000.
Excise Duty @ 12.5% = 125
Sub total. 1125.
VAT @ 14.5% on 1125 = 163
Total = 1288/-.
Here VAT is also applied on Excise Duty of 125 which is a Tax nothing to do with product. This will be eliminated in GST. Number other ceases and Octroi etc are removed.
With GST
assuming 13.5% tax CGST AND SGST
Product cost 1000
CGST @ 13.5% 135
SGST @ 13.5% 135
Net cost 1270. Difference is Rs. 18. This reduction in cost will go to consumer.
Due to one tax across the country Check posts not required.
Another advantage is if a manufacturer is buying goods from different state at present CST levied by supplier can not be taken as input credit.
With GST that also can be taken which will reduce product cost. In the present system on CST also vat is applied. This is tax on tax.
With GST inflation will come down which is good for everyone.
If you know the concept of real interest rates you can understand the effect of Inflation.
For example. Banks FD rate is 8% and inflation is say 6% then real interest rate is 2% . Means your investment will grow at the rate of 2%
From 2009 to 2015 inflation was above 8% means no gains on investment.
Hope this will clear your doubts