From automobile to real estate and consumer goods: What will be the impact of GST

 

India is all set for its most ambitious reform in decades, which is expected to transform the world’s fastest growing major economy into a single market for the first time. The long-awaited Goods and Services Tax (GST) rolls out Saturday even as businesses complain they are ill-prepared for the massive changes about to ripple through India’s unwieldy $2 trillion economy. (Dibyangshu SARKAR / AFP)

The Goods and Services Tax (GST) has been termed a potential game changer, the single biggest tax reform in independent India, one that the government says is founded on the concept of “one nation, one market, one tax”.

The GST, according to the government, will be extremely beneficial to consumers, as it will bring down the price of goods and curb inflation. It is also said to reduce the delays in tax payments and ensure more stringent checks on the same.

What remains to be seen, however, is how the GST rates—from 5% to 28%—will affect various consumer-facing sectors of the Indian Economy. A look at some of these sectors and how GST will impact them.

GST adds to the challenges the sector has faced, from demonetisation and then implementation of more stringent emission norms. The passenger car segment is expected to see an overall reduction in tax outgo, with bigger cars and sport utility vehicles (SUV) benefiting from lower tax rates.India is all set for its most ambitious reform in decades, which is expected to transform the world’s fastest growing major economy into a single market for the first time. The long-awaited Goods and Services Tax (GST) rolls out Saturday even as businesses complain they are ill-prepared for the massive changes about to ripple through India’s unwieldy $2 trillion economy. (Dibyangshu SARKAR / AFP)

CEMENT: A marginal tax relief

Contrary to expectations of cement firms, which were hoping for an 18% GST rate, the sector has been categorised in the 28% slab. Despite that, cement makers will see some relief in tax payout as the effective tax rate for packaged cement is anyway 29-31%.

CONSTRUCTION, REAL STATE: Input cost credit to offset higher rate

So far, the construction sector, including real estate, has had an effective tax outgo of between 11% and 18%. Under GST, the entire works contract is charged 18% tax. However, the sector is likely to gain from the input tax credit that is available under GST rules.

CONSUMER GOODS: Anti-profiteering measures to keep a lid on gains

Packaged consumer goods makers’ sales growth will be hit in the near term as trade channels have cut purchases in the run-up to GST. Overall impact is seen as neutral as rates have been cut on mass consumption items and hiked on higher-end products.

JEWELLERS: No dent to demand

The GST rate on gold jewellery has been fixed at 3%, lower than expectations of a 5% rate. The new rate is close to the current 2%. Hence, it should not affect consumer buying dramatically.

LUXURY HOTELS: High-end chains will pay more

From a pre-GST tax rate that varied between 18% and 25% based on state levies, GST classifies hotels into four buckets based on room tariffs. Those with room rates below Rs1,000 will be tax-exempt, although the rest will be taxed at 5%, 12%, 18% and 28%.

MULTIPLEXES: Input tax credit will bring benefits

Multiplexes are expected to benefit, primarily owing to input tax credit on fixed costs such as rent and common area maintenance. The GST rate has been fixed at 28% for tickets costing over Rs100.

TELECOM: Hit by higher tax burden

Telecom companies, already weighed down by high taxes and levies, now need to contend with an additional 3% tax with the shift to GST. A service tax of 15% applied to telecom services earlier.

VALUE FASHION: Gets a leg-up

The 5% GST rate on apparel priced below Rs1,000 is expected give a fillip to the value fashion business. Post GST, the entire value chain—raw material to the finished product—will come under the tax net.

 

Battery-Less Cellphone Prototype Harvests Energy Out of Thin Air

 

HIGHLIGHTS

  • The prototype uses backscatter communication technology
  • It can currently only make calls and send texts
  • A more advanced version is in the works

A team of researchers at the University of Washington has come up with a working prototype of a cellphone that doesn’t require a battery to make calls or send text messages – instead, it harvests energy from thin air, more specifically, radio signals. Right now, all it features is an LED light and buttons on a circuit board, however, a more advanced prototype with an E Ink display and better call quality is in the works.

The projected was spearheaded by UW research associate Vamsi Talla, working at the lab of UW CSE associate professor Joshua Smith. Talla has been working on several wireless connectivity projects that have made headlines in the recent past, including the breakthrough Passive Wi-Fi system unveiled last year. The Passive Wi-Fi system, being commercialised by Smith’s startup Jeeva Wireless, uses 10,000 times less power than traditional Wi-Fi systems by utilising backscatter communication technology. Backscatter tech uses reflections of signals (whether existing or new) to communicate, allowing a network of passive and active devices where the signals themselves are a source of power and the medium of communication.

Talla’s also worked on a way to power electronics, including cameras, using Wi-Fi signals. Other work includes a way for power-constrained devices like medical implants to communicate with smart devices by converting Bluetooth signals into Wi-Fi. This use of backscatter communication between more than one type of technology is being called ‘Interscatter’ by the UW team, short for ‘inter-technology backscatter’.Battery-Less Cellphone Prototype Harvests Energy Out of Thin Air

The UW researchers’ work on battery less smartphones further developed this backscatter communication technology. Along the lines of its Passive Wi-Fi system, which “decoupled the digital and analogue operations involved in radio transmissions” to get create low power Wi-Fi transmissions, the team realised it had to go one step further for cellphone signals.

“Converting analogue human speech to digital signals consumes a lot of power,” said Talla in a statement to Wired. “If you can communicate using analogue technology, you’re actually more power efficient,” he added, explaining that the battery-less cellphone uses digital backscatter signals to dial the numbers, and then used analog backscatter signals to make the voice call. As it is the passive device in network, the cellphone will use background radio signals to power it.

Talla notes that for the battery-less cellphone to work, it needs a nearby powered base station that’s converts the cellphone’s signals and connects to the digital cellular network. In the current implementation, Skype is used to connect, and the smartphone has a range of just 15 metres from the base station due to the low-power signals being used by the team. Once the technology is commercialised however, the base station could be a Wi-Fi router or even a conventional mobile base station, which with higher power signals could greatly boost.

For now, the way the prototype works is similar to a radio, requiring the user to press a button to switch between talking and listening. As we mentioned however, Talla is working on a more advance prototype with an E Ink display that can let the user send texts, better call quality, and perhaps even a camera. He adds that the current price of the prototype – built with readily available components – is less than a normal mobile phone, and the cost will only go down with mass production. One of the concepts that emerged from the development is idea of giving every smartphone a battery-less calling and texting component, to which it falls back when it loses battery power – ensuring the user will always be able to communicate.

 

GST to put a few organised used-car dealers out of business

 

Goods and Services Tax (GST) may have made new cars more affordable but it will increase the prices of used cars, boost the unorganised market and wipe out smaller players from the organised segment.

According to used car operators GST on used cars is the same as new cars which is 28 percent and this is several times higher than the value added tax (VAT) during the pre-GST days.

Nagendra Palle, Chief Executive and Managing Director, Mahindra First Choice Wheels said, “There is no differentiation made under GST with regards to new or used cars. Like VAT GST is applied on the margins earned by the dealer and because of the high tax slab it makes the business unviable for the dealer”.

VAT was a state-levied tax and thus is not uniform in nature. While some states charged VAT in absolute terms others charge it on a percentage basis. Through the unorganised route several transactions happen in cash and, therefore, will slip out of the tax net.

Mohan Mariwala, Founder and Managing Director, Auto Hangar, said, “Many of the small players in the organized market will have to shut shop because of the adverse impact of GST. This will give rise to sales through the unorganized route”.GST to put a few organised used-car dealers out of business

Auto Hangar, which runs the authorized dealerships for Mercedes-Benz and Honda, also has a used-car channel for Mercedes cars. Mahindra First Choice with more than 1000 sales outlets is the largest organised multi-brand player in the country.

Organised players form 12 percent of the total used-car market, which is 3.3 million or 1.2 times the new car market. With the average used-car costing between Rs 2.5-3 lakh, India’s used car industry generates a turnover of more than Rs 80,000 crore.

In addition, GST will also impact the supply of cars into the second hand car market as the rates offered at ‘trade-ins’ will be lower than what were offered earlier. More than one-fourths of car buyers exchange their older cars for a new car which is called a trade-in.

“The used-car industry is bigger than the new car market and growing at a good pace. But it depends on the new car market for survival. Around 27 percent of new car buyers exchange their existing car for a new one. This, too, will get impacted. But we hope that the government will take a note of this and take corrective steps,” added Palle.

The used-car industry has been growing at a compounded annual growth rate of 15 percent during the last five years despite a lull in demand for new cars during the past 2-3 years. The availability of quality used cars at under Rs 3.5 lakh had led to stagnation of growth of entry-level cars priced in the same bracket.

GST, which was rolled out on July 1, has led to a fall of 2.4-14 percent on new cars, sports utility vehicles and other vehicles.

Having A Pot Belly Can Increase Your Risk Of 13 Types Of Cancer

Carrying some extra timber around your waist puts you at an increased risk of 13 different cancers which have been linked to obesity, with new research finding that waist size is as good an indicator of cancer risk as body mass index (BMI).

The research, published in the British Journal Of Cancer, found that men with a waist size of over 102cm (40in) for men (88cm/35in for women) resulted in an increased risk. Adding 11cm to the waistline raised the risk of obesity-related cancers by 13%. For bowel cancer in particular, adding just 8cm to the waistline increases the risk by 15%.

Being overweight is the second largest preventable cause of cancer after smoking. Excess body fat can alter the levels of sex hormones like testosterone and oestrogen in the body, cause inflammation, and increase levels of insulin – three factors that are all linked to a higher risk of cancer.

The study was undertaken by the International Agency for Research on Cancer, a branch of the WHO, and looked at data from 43,000 people tracked for an average of 12 years. More than 1,600 of them were diagnosed with an obesity-related cancer during the period.

BMI, waist circumference and waist-to-hip ratio were correlated with the risk of obesity-related cancers, with the study finding that all three measurements of body fat were good indicators.

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Where waist measurement can prove most useful is in highlighting the amount of visceral fat a person is carrying. This type of fat wraps around the organs and is a greater danger to health than fat carried elsewhere on the body, and a larger waist size is a good indicator that a person is carrying high levels of visceral fat.

The BMI measurement uses a simple weight measurement and so does not differentiate between the amount fat or muscle on the body, and it also cannot identify where fat is carried.

However, the study shows that being in the overweight or obese bracket by any measurement is bad news, so it’s worth keeping tabs on weight by whatever method you prefer. Waist size has the advantage of being the easiest to find out – just wrap a tape measure around your waist at the belly button.