The document provides an overview and analysis of India's Goods and Services Tax (GST) reform. Some key points: 1) GST is expected to be implemented in April 2017 and will replace many existing taxes with a single, nationwide indirect tax on the sale and manufacture of goods and services. 2) GST aims to create a unified Indian market, reduce costs for businesses and consumers, and broaden the tax base. 3) The tax is expected to have wide-ranging economic and sectoral impacts, lowering costs for many industries while modestly increasing prices for some consumers in the short-run. 4) Overall, GST is projected to boost India's GDP by streamlining taxation

1. Equentis Wealth Advisory Services (P) Ltd
Registered Office:
712, Raheja Chambers, Nariman Point,
Mumbai – 400021 India
Tel: +91 22 61013800
Email: info@researchandranking.com
Event Update
The Goods and Services Tax (GST)
Independent Equity Research
August - 2016

2. 2
“………………..but I have promises to keep, And miles to go before I sleep”
Robert Frost
AN UPDATE ON ONE OF INDIA’S MOST REVOLUTIONARY ECONOMIC REFORMS: GST
Q: What is the Goods and Services Tax (GST)?
A:
The GST is a comprehensive nationwide indirect tax on manufacture, sale and consumption of goods and services. The
aim is to make India a unified common market. GST will be levied and collected at each stage of sale or purchase of
goods or services.
Through an input tax credit mechanism, this tax will be collected on value-addition on transactions involving both goods
and services, at each stage of sale or purchase in the entire supply chain. This system allows the set-off of GST paid on the
procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end
consumer ultimately bears this tax being the last person in the whole supply chain.
The ultimate objective is to widen tax base of the country followed by reduction in tax rates leading to lower cost to
consumers.
The Government aims to implement GST from April, 2017.
Q: What are objectives of GST?
A: Some of the primary objectives of GST-based taxation are:
Ensuring availability of input credit across the value chain
Minimizing cascading effect of taxation
Simplification of tax administration and compliance
Harmonization of tax base, laws, and administration procedures across the country
Minimizing tax rate slabs to avoid classification issues
Prevention of unhealthy competition among states
Increasing the tax base and raising compliance
Q: What are the GST implication challenges?
A:
• Lack of Adaptation
• Trained staff
• Double registration can increase compliances and cost
• Lack of clear mechanism to control tax evasion
• Hard to estimate the exact impact of GST
Q: Which taxes will be subsumed into the GST?
A:
At the Central Level:
o Central Excise Duty
o Additional Excise Duty
o Service Tax
o Countervailing Duty
o Special additional duty of customs
o Central Surcharges and Cesses so far as they relate to the supply of goods and services.
At the State Level:
o Value-added tax / Sales tax
o Entertainment tax
o Octroi and entry tax
o Purchase tax
o Luxury tax
o Taxes on lottery, betting and gambling

3. 3
Q: What are the areas that are not covered under purview of GST?
A:
• All Petroleum products (a number of states have voiced concerns)
• Tax on entertainment and amusement levied and collected by Panchayat /Municipality/District Council
• Tax on alcoholic liquor for human consumption
• Stamp duty, Customs duty
• Taxes on consumption or sale of electricity
Q: What is the expected GST structure to be implemented in India?
A:
GST will be a dual rate structure under which both the Union and State governments will be empowered to levy and administer
taxes concurrently on a uniform base of goods and services.
CGST: The Centre would levy and collect CGST on all transactions within a state.
SGST: The States would levy and collect SGST on all transactions within a state, to be levied by the states.
IGST: The Centre would levy and collect IGST on all inter-state transactions. Rate of IGST will be approximately equal
to sum of CGST and SGST.
Q: Illustration – pre-GST and post-GST
A:
Pre-GST Scenario
Current Scenario (Rs.) Manufacturer Distribution Retailer Price to Consumer
Cost of Production 100 172 216
Value add 50 20 30
Total 150 192 246
Excise @ 12.5% 19 - -
TOTAL 169 192 246 253
CST @ 2% 3 - -
VAT @ 12.5% 0 24 31
VAT Set off (0) -
(24)
TOTAL 172 216 253
Source: Edelweiss Research
Post-GST Scenario
Current Scenario (Rs.) Manufacturer Distribution Retailer Price to Consumer
Cost of Production 100 180 210
Value add 50 20 30
Total 150 200 240 248
GST @ 20% 30 40 48
GST Set off - (30) (40)
TOTAL 180 210 248
Source: Edelweiss Research
Q: What are the expected benefits of GST?
A:
GST will result in lower tax incidence for manufacturers in organized sector, with a harmonized tax structure, unified tax
base and common rules and administrative procedures coming into effect across the nation. It will also result in widening
of the tax base to include a comprehensive list of goods and services. This will bring in transparency and encourage
investments in the organized sector, helping the economy gain growth momentum.
Specified consumer
price is of inter-
state, if goods are
moving in the same
state then price to
end consumer is
going to reduce by
Rs. 3, which is equal
to CST paid by
Manufacturer.

4. 4
GST will subsume large number of taxes imposed by the central and state governments. Full credit of input tax will be
available which will avoid double taxation, currently prevalent in some sectors. This will lower effective tax rates for
multiple sectors.
Logistics and inventory carrying costs will decline. Currently, companies put additional set ups like depots and C&F
agents in different states to bypass CST. With GST coming into force, these companies can have centralized warehouses
and avoid additional costs.
Logistics costs and transit time will also reduce going forward. Currently, considerable time is wasted by trucks at the
state border check-points due to the various sales and entry tax requirements of the different states.
Shift of business from unorganized to organized players as tax advantages currently enjoyed by the unorganized players
will diminish and market share of the organized players may potentially increase.
As per various estimates, the implementation of GST is expected to boost GDP growth by ~2% over next 2 – 3 years.
Q: Will inflation increase after GST?
A:
Impact of GST on inflation will be dependent upon the GST rate and its comprehensiveness. It is widely believed that
under the proposed GST, effective tax rate on goods (~70-75% of the CPI basket) will decline.
Services-oriented components constitute ~25-30% of the CPI basket with high weights on housing, transport and
communication, etc.
Currently, service tax is not imposed on certain (~12% of the CPI basket) services and these services are also expected to
be exempt under GST regime. Thus, hike in tax rate on services is unlikely to have any material direct impact on CPI.
A significant proportion (~35-40%) of goods (mainly agro products) included in the CPI basket is not subject to tax
currently and we expect this status will continue in future also. Thus, transition to GST will not have a significant impact
on inflation.
Q: What would be the sector-wise impact of GST?
A:
Sector
Impact of Tax
Rate
Inventory
Management
Logistics
For organized
Players
Overall
Impact
Cement
Consumer Durables
FMCG
Pharmaceuticals
Automobiles
Capital Goods
IT/ITes
Media
BFSI
Textile
Building / Home
Materials
Telecommunications
Metals
Multiplex
Source: Edelweiss Research
Color Code: Green – Positive, Red – Negative, Yellow -- Neutral

5. 5
DISCLAIMER
Equentis Wealth Advisory Services Private Limited (EWASPL) is registered under the SEBI (Investment Advisers) Regulations,
2013.
“Research & Ranking” is the brand under which the Research Division of EWASPL render’s its Research Services.
General Disclaimers: This Research Report (hereinafter called ‘Report’) is prepared and distributed by EWASPL for information
purposes only. The recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or
construed to be neither advice for the purpose of purchase or sale of any security, derivatives or any other security through
EWASPL nor any solicitation or offering of any investment /trading opportunity on behalf of the issuer(s) of the respective
security(ies) referred to herein. These information / opinions / views are not meant to serve as a professional investment guide
for the readers. No action is solicited based upon the information provided herein. Recipients of this Report should rely on
information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive
at an informed trading/investment decision before executing any trades or making any investments. This Report has been
prepared on the basis of publicly available information, internally developed data and other sources believed by EWASPL to be
reliable. EWASPL or its directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the
accuracy, completeness, adequacy and reliability of such information / opinions / views. While due care has been taken to ensure
that the disclosures and opinions given are fair and reasonable, none of the directors, employees, affiliates or representatives of
EWASPL shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost
profits arising in any way whatsoever from the information / opinions / views contained in this Report.
Risks: Trading and investment in securities are subject to market risks. There are no assurances or guarantees that the
objectives of any of trading / investment in securities will be achieved. The trades/ investments referred to herein may not be
suitable to all categories of traders/investors. The names of securities mentioned herein do not in any manner indicate their
prospects or returns. The value of securities referred to herein may be adversely affected by the performance or otherwise of the
respective issuer companies, changes in the market conditions, micro and macro factors and forces affecting capital markets like
interest rate risk, credit risk, liquidity risk and reinvestment risk. Derivative products may also be affected by various risks
including but not limited to counter party risk, market risk, valuation risk, liquidity risk and other risks. Besides the price of the
underlying asset, volatility, tenor and interest rates may affect the pricing of derivatives.
Disclaimers in respect of jurisdiction: The possession, circulation and/or distribution of this Report may be restricted or
regulated in certain jurisdictions by appropriate laws. No action has been or will be taken by EWASPL in any jurisdiction (other
than India), where any action for such purpose(s) is required. Accordingly, this Report shall not be possessed, circulated and/or
distributed in any such country or jurisdiction unless such action is in compliance with all applicable laws and regulations of such
country or jurisdiction. EWASPL requires such recipient to inform himself about and to observe any restrictions at his own
expense, without any liability to EWASPL. Any dispute arising out of this Report shall be subject to the exclusive jurisdiction of the
Courts in Mumbai (India).
Disclosure of Interest: The Research Analyst(s) who have prepared this Report hereby certify that the views /opinions
expressed in this Report are their personal independent views/opinions in respect of the securities and their respective issuers.
None of EWASPL, Research Analyst(s), or their relatives had any known direct /indirect material conflict of interest including any
long/short position(s) in any specific security on which views/opinions have been made in this Report, during its preparation.
EWASPL, the Research Analyst(s), or their relatives do not have financial interest in the issuer company(ies) of the said securities
nor have ownership of 1% or more individually or jointly till the date of this Report. EWASPL, the Research Analyst(s), or their
relatives have not received any compensation or other benefits from the said issuer company(ies) in last 12 months in any
respect whatsoever.
Copyright: The copyright in this Report belongs exclusively to EWASPL. This Report shall only be read by those persons to whom
it has been delivered. No reprinting, reproduction, copying, distribution of this Report in any manner whatsoever, in whole or in
part, is permitted without the prior express written consent of EWASPL.
EWASPL’s activities were never suspended by SEBI or any other authority. Further, there does not exist any material adverse
order/judgments/strictures assessed by any regulatory, government or public authority or agency or any law enforcing agency in
last three years. Further, there does not exist any material enquiry of whatsoever nature instituted or pending against EWASPL as
on the date of this Report.
Important These disclaimers, risks and other disclosures must be read in conjunction with the information / opinions / views of
which they form part of.
CIN: U74999MH2015PTC262812; SEBI Registration No.:INA000003874