Standard GST rate of 20% or more will dampen market mood: CLSA

There are a couple of key things to watch out for in the GST even if the Constitutional Amendment Bill is passed in this session of Parlaiment, Mahesh Nandurkar, India Strategist, CLSA tells CNBC-TV18.One, the market will be closely watching the standard GST rate. If the standard rate is 17-18 percent, the market will stay excited about GST, says Nandurkar. But if the standard rate is 20 percent or higher, the enthusiasm over GST will die down, he says.Second will be the flexibility offered by the Centre to the states on GST. States have been bargaining hard on the list of goods they can charge tax on and in some cases even on the rates they can charge.Nandurkar says that higher the flexibility offered to states, lower will be the effectiveness of GST.Below is the verbatim transcript of Mahesh Nandurkar's interview to Latha Venkatesh & Anuj Singhal.Latha: What sectors should be positively impacted if the GST is passed?A: The sectors that will be positively impacted are clearly going to be, like pretty much all the manufacturing goods. The basic understanding here is that the tax rates on the manufactured goods will go down and the tax rates on services will go up. I would say that it should be a positive for staples, autos, cement and a whole host of other household products. Basically, the entire manufacturing space I would say. Latha: The negative ones would be?A: The negatives will probably be more on the services side. So, such as the telecom services, and there are some media services. Even within financial services, let us say the banks that have higher fee component and the insurance where the services component and the services tax internals will be higher, I think could get negatively impacted by this. Also, some of the services like freight services, while those will be positively impacted the commercial vehicle producers might get negatively impacted because of more efficiency in the overall freight segment.For entire interview, watch accompanying video.