India Inc congratulates Modi government on decisive tax move

The GST itself is a misnomer for the Indian film industry. It is possible that bureaucrats feel that every film is blockbuster hit like Dangal or Baahubali 2. However, such hits happen once in a blue moon. They are not aware of the almost 500 films in southern languages are lying canned, and have not seen the light of day. The success rate for the entire Indian film industry is only 10 per cent, and is far less for the South Indian film industry. 

The GST on film industry’s production sector is 18 pc for all the service rendered by the artistes, technicians and equipment suppliers. As a producer incurs cost from initial stage of production, this 18 per cent GST as a service provider is high. The govt feels the entertainment industry is passing the burden to the audience. But 90 pc films are failures. 

Ultimately producers lose capital. The argument is that the GST paid by the producer can be adjusted in the next film. Unfortunately, if the first film is a disaster, the producer does not have the wherewithal to produce another film. So, theatre occupancy will also come down. We want taxes to be reduced at every single stage to the lowest level possible.

Vinnie Mehta, Director General, Automotive Component Manufacturers Association Of India (ACMA) The auto component industry whole heartedly welcomes this path-breaking reform. While Tier1s/larger companies are GST ready, I am a bit apprehensive about the preparedness of Tier 2s and Tiers 3s, the small and medium enterprises. 

Any non-compliance on any part of the value chain will defeat this reform, Tier 1s will therefore have to ensure that their downstream industry is GST complaint. Being an intermediary industry, we had made a plea to the government that the auto components attract 18 pc GST rates however, most components have been put at 28 pc. Considering we have a growing aftermarket in the country, a moderate rate would have resulted in better compliance and thus enabled tackling the grey and spurious product sales.

IATA has been in regular contact with the Indian authorities on several issues regarding the application of the GST to the airline industry based on the underlying legislation and have been supporting affected airlines with GST compliance-related activities in the lead-up to implementation on 1 July 2017. Nonetheless there are still information gaps. We look forward to receiving the guidance notes to be provided by the GST Council, which will clarify various airline specific issues, such as the taxation treatment of continuous journeys, and other pressing matters. On the air-cargo side, the levying of GST on cargo export services by air contradicts standard GST principles as well as the treatment of such services under the Service Tax regime. Clarification would help align this with international standards.

RAI acknowledges the GST as a game changer for the retail industry. It is a giant step forward for India to create uniformity of taxes across the country. GST is more about change management than taxation—it is undoubtedly one of the biggest exercises in change management till date for team India. Almost everything we have learnt as citizens of this country with respect to indirect taxes will have to be quickly un-learned to welcome an era of one country one tax. Like with all change management, reactions to GST has three phases: Uninformed optimism, informed pessimism and finally informed optimism. The first phase existed till the mid-May 2017; and we are now in the second phase of informed pessimism that may peak by end August 2017.