Home / Politics / Policy /  GST: Game changer

Following the passage of the 122nd constitution amendment bill by the Rajya Sabha on Wednesday, a look at the sectoral impact of the goods and services tax (GST).

Transport and logistics

GST offers a major business opportunity for the transport and logistics sector as other industries recast their supply chain for tax efficiency. But there is no clarity on taxation of petroleum products which are major inputs for this sector, although the Union finance minister has said petroleum products will be zero-rated and would be brought under GST after GST Council decides. Clarity is required to ensure that international freight is zero-rated to keep taxation of freight in line with global practices.

Entertainment and media

Subsuming entertainment duty (other than levied by local municipalities) and luxury tax would positively impact media and entertainment and hospitality sectors. Taxability of restaurant supplies as a service is a welcome move and should reduce consumers’ bills. Broadcasting agencies and DTH operators could face challenges in determining place of supply. Clarity is required on the taxability of video streaming services by an offshore entity.


Subsuming all central and state cesses into GST will be a welcome relief for the automobile sector which is subjected to multiple cesses. Uniform classification and tax rates under GST will do away with the need to register a vehicle in one state for tax savings and using it in another. Removal of 1% additional tax on inter-state supplies from the bill is good for the sector. Luxury cars could be taxed at a higher rate.


FMCG sector could gain from reduced tax rates, efficient credit mechanism and elimination of entry tax. However, cash flow would be impacted due to leviability of GST on stock transfers. GST on free supplies would adversely impact marketing schemes. Subsidies linked to supplies would also attract GST.

Information technology

Refund claims of input tax credit pertaining to pre-GST era exports which are denied by tax officers either fully or partly after introduction of GST may lapse. While upfront exemption to SEZ units will be replaced with a refund model, companies having Software Technology Parks of India units need to evaluate the export scheme.


Rolling of entry tax into GST is a major relief for e-commerce players who have been facing significant challenges in various states. E-commerce players will be burdened with additional compliance of tax collection at source.


While MRP based valuation has been done away with, new valuation mechanisms could pose a challenge for this sector. The sector needs to seriously assess its supply chain, tolling arrangements and pricing, in light of the model GST law.

Banking and financial services

Tracking of exempted supplies under GST is imperative to make sure that interest income, sale of securities and other similar financial transactions continue to be exempted under GST.


The rate of tax for telecom services is likely to be increased from present 15% which would directly impact consumers. There is no mechanism to carry forward Central Value Added Tax (CENVAT) credit relating to spectrum charges, when it has not been totally availed of prior to introduction of the GST.


Flying could become more expensive with increase in rate of tax from the current 6% to 9%. Ticketing systems would need to be realigned on account of changes in place of supply of passenger transportation services.

Compiled by Pratik Jain, leader, indirect tax, PwC. With assistance from Abhishek A. Rastogi, director, and Prashant Gupta, manager, indirect tax, PwC.

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