Focus now on MRP as GST rollout nears

The markets are buckling up for the rollout of the unified tax reform, GST on July 1, however, there is also a furrow over the GST roll out among the various stakeholders. Even as market stakeholders are predicting an immediate slowdown in the economic turnover as an impact of GST, there are a string of segment that will bear the immediate fruit post-GST.

The proposed GST rates seem to be beneficial across the sectors, at large, affirmed R Sreesankar, Head, Institutional Equities of Prabhudas Lilladher.

In an exclusive interaction with Dalal Street Investment Journal, R Sreesankar said, “The premium hotels seem to be at a disadvantage, the cigarette companies seem to be at an advantage. However, there are marginal benefits and disadvantages across sectors and in general consumer products seem to be benefitting.”

Confirming the market speculations, Sreesankar said that there could be various obstacles for the corporates in the first two-quarters from the implementation of GST. Especially, since the roll out will require the companies to be ready for the ‘system based and process driven’ changes, initially, there may be disruptions in the operations.

Emphasising on the relevance of MRP with the GST roll out, Sreesankar added, “The focus will move towards MRP as the taxation will be on MRP. The relevance of branch transfers, C&F agents, etc will come into question.”

Even as the cement industry, telecom industry, and financial services have witnessed an increase in their tax rate as per the revised rates introduced by the GST Council, the tax reform seems to make up for the disadvantages with additional benefits conferred as lower taxation of other inputs in the same sector or a smoother input credit system.

For instance, as cement is taxed at 28 percent, witnessing a 4 percent increase from its previous rate, the sector will also bore the benefit of just 5 percent taxation of coal and metal ore.