The new GST regime will act as a catalyst for driving the growth of manufacturing sector. It will have a far-reaching impact on business processes, compelling organizations to rethink & realign production costs, production time, supply chain, compliance, logistics, etc. • Supply Chain: GST will make organizations restructure their supply chains; realign their warehouses and logistics networks. The current warehousing strategies based on arbitrage between VAT rates in different States are likely to change with the advent of GST. Warehousing and logistics decision will be based on economic efficiency such as costs and locational advantages vis-a-vis key customers.. • Working capital requirements: The requirement of working capital will increase significantly as intercompany transactions will also now attract taxes. Manufacturing companies may have to strategize their supply management strategies in a manner that minimizes cash flow impact. • Transportation: Reorganized manufacturing plants and warehouses would reduce the primary freight charges. GST would eliminate the existing penalties on interstate sales transactions and facilitate the consolidation of vendors and suppliers. • Reduction in cascading taxes and improved Compliance: As a single tax regime GST will bring predictability and lower operating costs for businesses. It will reduce the overall tax burden with reduction of cascading taxes and allow the cross-utilization of tax credits across the supply chain. GST will demand businesses to set-up compliance mechanism for meeting the requirements. • Reduced cost of Production: The proposed GST will reduce the cascading of taxes and will lead potentially to lower production costs. • Consolidation and Outsourcing: With the increase in availability of organized and efficient players, possibilities of consolidation intensify. Manufacturing Services: Manufacturing services on physical inputs owned by other: The services included under Heading 9988 are performed on physical inputs owned by units other than the units providing the service.
As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process. Since this Heading covers manufacturing services, the output is not owned by the unit providing this service.
Therefore, the value of the services in this Heading is based on the service fee paid, not the value of the goods manufactured. Food, beverage and tobacco manufacturing services comes under Manufacturing Services activates and sub-heading 9981. • Meat processing services: • Fish Processing Services: • Fruit and vegetable processing services: • Vegetable and animal oil and fat manufacturing services: • Dairy products manufacturing services: • Other food product manufacturing services: • Prepared animal feeds manufacturing services: • Beverage manufacturing services: • Tobacco manufacturing services: • Textile manufacturing services: • Wearing apparel manufacturing services: • Leather and leather product manufacturing services: • Wood and wood product manufacturing services: • Paper and paper product manufacturing services: • Coke and refined petroleum product manufacturing services: • Chemical product manufacturing services: • Pharmaceutical product manufacturing services: • Rubber product manufacturing services: • Plastic Product manufacturing services: • Other non-metallic mineral product manufacturing services: • Basic Metal manufacturing services: • Structural metal product, tank, reservoir and steam generator manufacturing services: • Weapon and ammunition manufacturing services: • Other fabricated metal product manufacturing and metal treatment services: • Computer, electronic ad optical product manufacturing services: • Electrical equipment manufacturing services: • General Purpose machinery manufacturing services: • Special purpose machinery manufacturing services: • Motor vehicle and trailer manufacturing services: • Other transport equipment manufacturing services: • Furniture manufacturing services: • Jewelry manufacturing services: • Imitation jewelry manufacturing services: • Musical Instrument manufacturing services: • Sports goods manufacturing services: • Game and toy manufacturing services: • Medical and dental instrument and supply manufacturing services: • Other manufacturing services n.e.c.:
Services treated as Manufacturing Services under GST