In­dia |In­ter­na­tional

Shoes & Accessories - - Contents -

The Goods and Ser­vices Tax (GST) rates for the footwear prod­ucts will be a twotier struc­ture –footwear with MRP up to ` 500 would be taxed at the rate of 5% and footwear with an MRP of more than ` 500 to be taxed at the rate of 18%. Cat­e­gory I: Footwear with MRP up to ` 500 Cur­rently, the af­ford­ably priced plas­tic and Hawai footwear en­joys a con­ces­sional VAT rate in most of the ju­ris­dic­tions and the cat­e­gory’s av­er­age in­di­rect taxes are 4%. At 5% GST , the tax im­pact of this seg­ment has in­creased. For footwear other than Hawai and plas­tic, the cur­rent av­er­age in­di­rect tax in­ci­dence is at around 10.20% (range is 0-14.5%) which will come down to 5% post GST . How­ever, the vari­a­tion in in­di­rect taxes in this cat­e­gory is sig­nif­i­cant across states and play­ers with sales con­cen­trated in states such as Delhi and Haryana, which have lower taxes, are likely to see an in­crease in tax li­a­bil­ity and play­ers op­er­at­ing in states like Ma­ha­rash­tra and Gu­jarat (where cur­rent taxes are higher) are likely to ben­e­fit un­der the GST .In Te­lan­gana,andhra Pradesh,west Ben­gal,haryana and some other states there was 5 per­cent tax on plas­tic footwear ir­re­spec­tive of prices. How­ever, Now at 18 per­cent the in­dus­try will have to in­crease prices by 12 per­cent . Cat­e­gory II: Footwear with MRP be­tween ` 500 and ` 1000 In the in­ter­me­di­ate seg­ment, for footwear be­tween the ` 500 to ` 1000 MRP cat­e­gory, the im­pact is neg­a­tive for all prod­uct cat­e­gories as in­di­rect tax bur­den of all seg­ments will go up un­der GST. The in­crease in in­di­rect tax li­a­bil­ity will be up to 9% in cer­tain states. Cat­e­gory III: Footwear with MRP above ` 1000 In the most ex­pen­sive seg­ment, Hawai and plas­tic footwear with MRP above ` 1000 will lose the pref­er­en­tial treat­ment across many states, which will in­crease the tax li­a­bil­ity sig­nif­i­cantly. Leather footwear priced above ` 1000 en­joyed a lower cen­tral excise duty of 4.2%, post abate­ment and with fit­ment in 18% GST, this seg­ment will see its in­di­rect tax in­ci­dence go up.

The seg­ment ex­clud­ing Hawai, plas­tic and leather is the big­gest ben­e­fi­ciary un­der the GST. This seg­ment in­cludes sports shoes, ca­sual shoes, tex­tile-based prod­ucts and other pre­mium footwear prod­ucts priced above ` 1000. Cur­rently, this seg­ment does not get con­ces­sion ei­ther from the Cen­tre or states and faces the high­est in­di­rect tax bur­den. The av­er­age in­di­rect tax in­ci­dence for these prod­ucts across states is 22%, which will now come down to 18%, lead­ing to lower in­di­rect tax bur­den for this cat­e­gory.

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