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The impact of GST has been a mixed bag for the Capital Goods and the Consumer sector. While the Capital Goods sector would benefit from a lower tax rate on contracts there would be higher tax incidence on cables and transformers.
A few segments in the consumer sector would see higher effective taxes and need to take price hikes to offset cost pressures from increased taxes. Key changes/ surprises vs. expectations were for
a) Fans which were expected to come in the 18% bracket but have been bought at 28% (currently at 24%) and need price hikes.
B) Air conditioners which have been put in the 28% bracket and would need 2-3% hikes,
c) Transformer put in the 28% GST rate vs. the current 18% implies price hikes need to be taken
d) Cables which were earlier in the 18% bracket taken to 28%,
e) Work contract which is in the 15-20% range (depending on the VAT rate) taken to 12% is a positive for the construction sector.
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