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ET Intelligence Group: The rationalisation of GST slabs is expected to boost overall consumption and support economic growth. However, the exact impact will vary from sector to sector and will depend on factors, including the effect of input tax credit and trend in costs of intermediates. Sachin Kumar and Ranjit Shinde analyse the sectorwise implications.AutomobilesTwo-wheeler (2W), passenger car and tractor companies will be major beneficiaries. GST is reduced to 18% on 2Ws, below 350 cc and cars below 1,200 cc from 28%. In addition, the effective duty on large cars will be 40% compared with earlier 43-50%. Mahindra and Mahindra, Maruti Suzuki India, and Escorts Kubota will be major beneficiaries. 2W makers of higher than 350 cc bikes, including Eicher Motors and Bajaj Auto will be affected negatively due to GST rise to 40% from 31%.Banking and FinanceThough there is no direct benefit, an expected increase in consumption of white goods is likely to result in improved credit demand, which is expected to benefit retail focussed lenders, including Bajaj Finance, ICICI Bank and HDFC Bank.123709036CementThe reduction of GST to 18% from 28% is likely to reduce cement price by ₹25-30 per 50 kg bag. The impact of an increase in GST of coal, a major input, to 18% from 5% is likely to be neutralised given that the green energy cess of ₹400 per tonne will no more be levied separately but will now be a part of GST. While these changes are least expected to change the near term demand scenario, cement makers are expected to show improved financials in the coming quarters once construction activities increase after the monsoon recedes. UltraTech Cement, Ambuja Cement look well placed to benefit from this.Chemicals and fertilisersGST on key raw materials such as sulphuric acid, Nitric Acid, Ammonia, micronutrients, menthol and its derivatives to 5% from 12% augurs well for sector incumbents, including Aarti Industries, Tata Chemicals, GSFC, Deepak Fertilizers and RCF.Consumer GoodsMakers of air conditioners, TVs and dishwashers, including Voltas, Blue Star, Havells are expected to benefit from GST reduction on these goods to 18% from 28%. Companies selling fast moving consumer goods (FMCG) in foods and personal care categories such as HUL, Marico, Dabur, Britannia and Nestle may show demand uptick after GST reduction to 5% from 12-18%.HotelsGST on average room rates below ₹7,500 is reduced to 5% from 12%. This augurs well for Lemon Tree Hotels and Ginger chain of Indian Hotels.InsuranceTraditional plans such as pure protection plans currently taxed at 18% will benefit the most from the exemption. However, a nil GST will take away the benefit of availing input tax credit (ITC). Companies with higher traditional business and lower expense structure such as LIC, HDFC Life and Max Financial Services will benefit more than ICICI Prudential and SBI Life.PowerGST reduction to 5% from 12% on solar cells augurs well for renewable energy companies including Acme Solar, Waaree Energies and Premier Energy. Thermal power producers on the other hand such as NTPC and Tata Power are likely to be affected by the GST increase on coal to 18% from 5%.Textiles, retail and FootwearGST reduction to 5% from 12% on Synthetic yarn, textile floor coverings, towels, woven fabrics, and technical textiles is expected to benefit Welspun Living, Vardhman Textiles and Trident. GST reduction on footwear below ₹2,500 may benefit Bata India and Relaxo Footwears. Retailers including Trent, Aditya Birla Fashions and Go Fashion may benefit from the rate cuts. However, high-end companies including Vedant Fashions and Raymond may face the brunt of GST increase to 18% from 12%.

Mumbai: Cement prices are likely to fall by ₹25-30 per bag of 50 kgs in the near term as the recent price hikes taken by companies are rolled back to pass on the benefits of lower tax rates to consumers. These lower prices, though, are unlikely to trigger higher demand immediately given the inelastic nature of cement, analysts said.The GST council, on Wednesday, reduced rates for cement to 18% from 28% earlier. This is the first time that rates for the building material have been reduced after the introduction of the GST regime eight years ago."In the near term, the benefit will need to be passed on to customers," JM Financial Institutional Equities said in a report.In anticipation of a reduction in tax rates, companies had already hiked prices of cement by around ₹5-40 per bag across regions in the last week of August, with price hikes sharpest in southern India. Prices were hiked after they remained subdued through July and August due to higher-than-average monsoon rains and the festive period.The cost of cement typically accounts for about 12% of the construction cost for an individual home buyer. "Cement is a commodity; a lower GST rate will not lead to consumers buying excess volumes," Girija Shankar Ray, the lead analyst at YES Securities said in a recent report.

Mumbai: A 10 percentage-point reduction in the taxation for cement, the primary building material, is set to boost India's property sector, potentially lowering overall project costs for developers and homebuyers alike.At its 56th meeting, the government slashed the GST on cement, of which India is both the world's second-biggest consumer and producer, to 18% from 28%. Cement alone accounts for a significant portion of construction expenses, and the steep reduction in tax is likely to ease cost pressures across residential and commercial projects.Similarly, the rate on labour-intensive inputs, such as marble and travertine blocks, has been cut from 12% to 5%, while granite blocks will also attract only 5% GST compared with 12% earlier. Sand-lime bricks and stone inlay work too have seen their tax rate reduced to 5% from 12%. These cuts are expected to make finishing and structural materials more affordable, directly impacting construction budgets."The GST rationalisation is a festive bonanza for Indian consumers and a strategic boost for the economy. By enhancing purchasing power, stimulating consumption and helping contain inflation, this reform creates a multiplier effect that will propel India's GDP growth beyond 8%," said Niranjan Hiranandani, chairman, NAREDCO National.