#GST: Industry upbeat

With the GST, the ambiguity around prices due to multifarious taxes gets eliminated. Consumers cannot be taken for a ride anymore. States are not deprived of revenue through stock transfers. A lot of administrative procedures have been done away with. Businesses can focus on consumers through demand-fulfilling models. There is enough clarity on procedural aspects and prices are less likely to rise as there are tax shields to prevent it. Anti-profiteering measures will contain inflationary pressures. In a genuine consumption-led economy inflation surfaces only when there is more demand than supply. The new Goods and Services Tax rates are fixed at more or less the current level. In the initial months, there is bound to be more attention on learning about GST. I am confident that the economy will soon ride in top gear on the path to growth.

The move is welcome, as this will realise the concept of ‘one country, one tax.’ It will prevent unhealthy competition among states and facilitate interstate commerce. In Tamil Nadu, 92 pc of businesses have reportedly already migrated to the GST platform due to the freedom the new tax regime affords businessmen to operate pan-India. GST is the biggest fiscal reform since Independence and a paradigm shift in India’s indirect tax regime. It will boost Government’s revenues, make tax evasion harder, reduce the plethora of taxes that must be paid, remove the cascading tax effect, and help accelerate economic growth through a unified and simpler taxation system. End consumer will benefit the most. It is heartening that healthcare has been exempted from GST, which will help keep treatment costs low for the poor and the needy.  

As the GST will address the loopholes in the collection of indirect taxes from all concerned, Govt’s revenue is expected to grow higher. Higher revenue will support Govt’s initiatives to reduce tax rates over time. It is eagerly expected by our foreign business partners as the business and job opportunities are set to rise after GST. 

After discussions, due care is taken to ensure SMEs are not affected with an exemption limit of Rs 20 lakh. Nil or lower rates are proposed for food and other essential items while higher rates are proposed for luxurious and non-essential items. We can call it a major tax reform for the longstanding benefits of India and its people. 

As the indirect tax structure is applicable to the whole of India, it will help ease of doing business and large firms having operations in various States can easily follow the uniform tax structure and price their products.

I believe the Goods and Services Tax will truly transform India to a single market. The manufacturing sector will largely be benefited as companies will be able to make more informed decisions based on Supply chain efficiency, harness strategic advantage of locations, wages and move goods interstate faster and quicker at lower costs. In my opinion, the GST will truly benefit the Make in India push and if we can improve the ease of doing business ranking, the combined impact will be a game changer for the Indian manufacturing sector.

GST will free home buyers and investors from the hassles of paying state and central taxes at different levels. With the removal of double taxation, the tax rate under GST looks favorable for the real estate market. There are chances the purchase cost for home buyers in the luxury and premium housing segment might escalate but on the other hand, the prices of affordable housing and mid-level real estate segment should remain unchanged. The affordable housing project is expected to enjoy the tax exemptions after GST. This is aligned with the HousingFor-All by 2022. Controlled and well-regulated systems are the real need of the hour in the direction of better tax compliance and improving the government’s fiscal position.

India would benefit immensely by the introduction of GST, a path breaking and transformative legislation.  GST would play a lead role in enhancing tax base and cultivating the culture of compliance given the technology & and audit trail based compliance structure.  

As regards the Industry, the GST would address three of its major concerns: Permitting input credit in respect of all forms of tax paid on raw materials and services incurred in all the States of the country, enhancing the ease of doing business and at the same time reducing the cost of compliance; and providing level playing field for the industry by curtailing scope for unaccounted sale by certain section of the industry.  

If the transition to the GST is to be effective, then the systems of GST Suvidha Providers (GSP) have to be validated thoroughly to ensure compliance and their confidence strengthened, so that they are clearly enabled to handle the transition related issues. What do GSPs think of their technical compliance and how confident are they to handle the transition? We would not be surprised that they are neither fully equipped technically nor are they confident about handling the transition. Do we still go ahead with the roll out? If priority be given to quality in this implementation, then obviously no is the answer. If time is the most critical factor in this implementation, then the answer will be yes; which would also mean the necessity of a large team to address all those teething issues.

It is a game-changing move for millions of SMBs, since thousands of them work in the unorganised sector. The Centre has thought of innovative steps to help SMBs adapt to GST by proposing a low tax rate of just 0.5-2 pc if the business turnover is less than Rs 75 lakhs p.a. Most SMBs are looking forward to reduced cost of operations and significant ease of operations, compared to the prior service tax/VAT regime. The new regime allows SMB customers to easily take input credit on many services and products consumed – and pass on the benefits to end-consumers.