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Impact of GST on SMEs – Mr. R. Narayan, Founder and CEO, Power2SME

However, now the industry veterans which also have kept their fingers crossed for the favourable final rate of GST.

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“Contrary to popular belief, the passage of the GST constitutional amendment marks only the beginning of a fairly tedious procedure that should ultimately result in the implementation of a unified GST” in India at best by the second half of the financial year beginning April 2017, said Ritika Mankar Mukherjee, senior economist at Ambit Capital.

Going forward, with the introduction of the new law, businesses will be motivated by the uniform tax structure. On Twitter, he said this reform would help the “Make in India” initiative aimed at turning the country into a manufacturing hub, boost exports and thus increase employment while providing enhanced revenues.

The maximum rate of tax under GST is expected to be 18pc, though there is provision for an additional “sin” tax on products such as alcohol and cigarettes.

How do you look at the passage of GST bill? With a unified and low tax regime, the new law could also cut tax evasion, and make it easier for authorities to track and reduce black money.

“No tax reform can succeed unless adequate revenue generation is assured to both the Centre and states”.

It will replace a raft of different state and local taxes with a single unified value added tax system to turn the country into world’s biggest single market.

Indian parliamentary approval for a crucial tax reform has been hailed as the biggest since the country gained independence in 1947, with the potential to boost GDP by up to 2% a year. “The demand in the market is here to gain momentum as the end-customers will be immensely benefited by the expected reduction in tax rate”.

As far as possible, no sector of the economy should feel GST as a problem, instead it should be welcomed as a major solution to the complexities in the Indian paradigm, it noted. It took the government more than a year to bring the Congress around and get the bill passed in the upper house last week.

Doing business on a pan-India basis has indeed been hard for entities, as tax rates and rules differ; even interpretations can vary and differences between tax officials and companies end up in courts, where matters can drag on for years.

Mr. Rajesh Gupta, Director, Okaya Power Pvt. “We believe, the estimated decrease in the now effective indirect taxes once the GST is finally implemented will drive the next phase of growth in the industry and the benefits of the lower tax rate, which shall be passed on to the customers in the form of reduced prices of the product line, will surely eliminate the current weak demand scenario in the market”.

The centralised tax, the GST, would subsume state levies like VAT or CST.

In the immediate-term, Nomura analysts warned the GST could negatively impact the economy as higher taxes hit consumption and push up inflation by 20-70 basis points in the first year of implementation. If the GST rate remains below the overall taxes we pay now, it will be beneficial, otherwise it may turn out as a real dampener, ” said Mr. Naveen Goel, Director, Glint Faucets Inc. “We expect the GST rate to remain below 18%, then only it will create a favourable situation for the industries to flourish”.

“We will have to fit services in the slab which is neither too high or low at the time of deciding the final rate structure”, he said.

Countries are resorting to desperate measures to achieve growth…

Jaitley highlighted services sector as the main strength of the economy while India tries to increase its manufacturing output.

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“The new regime must usher in border-less, barrier-less, seamless movement of goods and passenger so that efficiency is engendered in road transport ecosystem and transportation and logistics cost is brought down to internationally competitive level”, said AIMTC former president Bal Malkit Singh.

GST Impact Luxury cars FMCG electronics items to get cheaper services dearer