Automobile

Key Impact

• Relief from long-pending disputes around GST rates on auto components with a single GST slab of 18%.
• Lower rates effectively increase disposable income, strengthen purchasing capacity, and support broader consumption growth.
• EVs retain tax edge, but reduced gap also makes hybrids attractive.
• Compensation cess relief on larger cars (including SUV and luxury vehicles) increases credit fungibility.

Way Forward

• Reassess pricing structures to manage profitability, dealer margins, and customer expectations.
• Manage inventory & working capital.
• Align distribution chain in terms of pricing, managing returns, promotional schemes, compliance requirements to minimize disruptions and disputes.
• Review state incentives, subsidies, and initiate dialogue with authorities if revisions or renegotiations are needed.
• Assess the treatment of accumulated compensation cess credits.
• I-T readiness to adopt the updated rates.
• Assessing impact of delayed utilization of ITC accumulated on account of capex.
• Focus on media and advertising strategies to showcase lower prices.

FMCG

Key Impact

• Lower prices, better affordability.
• Higher volumes, rural traction, festival boost.
• Positive investor sentiment.
• Regulatory clarity needed.
• Consumption and manufacturing boost.
• Faster refunds for exporters.

Way Forward

• Need updated billing systems for new rates.
• Reassess MRPs, margins, and product classifications.
• Realign pricing policies with trade partners.
• Advocate to the government on issues related to inverted duty refunds, cess credit, anti-profiteering clarity, and MRP re-sticking relaxations.
• Plan for transitional stocks.
• Update or relabel packaging to meet regulatory compliance.

Logistics

Key Impact

• Higher tax cash outflows for logistics players.

Way Forward

• Need for transition readiness.
• Service pricing impact across the supply chain to be evaluated for determining preferred GST rate for varied transportation services.

Financial Services

Key Impact

• Reduction in cost of insurance for consumers.
• Denial of ITC to create a cascade of taxes.
• Impact on policies issued in the past due to inability to increase premiums.
• Need to review premiums for new policies.
• Transition challenges.

Way Forward

• Determining the impact of denial of input credit.
• Change management for new rates.
• Advocacy for open issues.

Pharmaceutical

Key Impact

• Lower treatment costs, increased accessibility, and affordable healthcare.
• Lower costs for hospitals and diagnostic centers.
• Increased challenges for manufacturing firms of accumulated ITC on account of inverted duty structure.
• Transition planning and management for inventory and in-transit stock.
• No immediate plans to revive anti-profiteering probes, onus on businesses to voluntarily pass on rate reduction benefits to consumers.

Way Forward

• Update ERP, tax systems.
• Reassess product pricing, MRP setting, and margin planning to reflect cuts.
• Restructure pricing policies, renegotiate contracts, and ensure timely talks on transitional aspects.
• Identify old stock, plan credit notes/discounts to clear inventory.
• Assess the risk of ITC accumulation for imported consignments in transit or on-hand stock, consider mitigation measures.

Agriculture

Key Impact

• Reduced cost of production.
• Boost sales due to enhanced affordability.
• Increased farmer income.
• Consumer to benefit due to overall synergy in the value chain.

Way Forward

• Restructure pricing policies and align with distributors/trade partners, renegotiate contracts, and ensure timely communication on transitional aspects to minimize supply chain disruptions.
• Reassess product pricing, and margin planning to reflect tax reductions.