All over India, the buzzword has been GST especially in the last week of June 2017. As the saying goes ‘All roads lead to Rome’, we found newspapers, television media, social media, discussing and debating only GST for the past few weeks. The faint hopes that GST mightbe deferred by few months slowly faded away and the business and the common man were getting ready for the inevitable.
At the stroke of the midnight hour on 1st July 2017, the Good and Services Tax became a reality with Prime Minister Mr. Narendra Modi billing it as a “Good and Simple Tax”. (GST)
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The nation woke up on July 1st with a mixed feeling of anxiety, fear, confusion, eagerness , hope and the like.
The strong belief is GST will play a vital role in creating a unified common national market, make India a manufacturing hub and generate more employment by increasing economic activity. It will also incentivize exports, help expand the tax net, contribute to the ease of doing business and accelerate the growth rate.
The advantage for Trade and Industry is that there would be common procedures for registration, duty payment, return filing and refund of taxes. GST is expected to ensure seamless flow of tax credit from manufacturer/ supplier to user/retailer to eliminate cascading of taxes. Further, neutralization of taxes would make our exports more competitive internationally. The benefits of exemption/composition scheme for a large segment of small scale suppliers have been extended to make their products cheaper.
The silver lines have started showing up. As many as 22 states had abolished border commercial tax check posts after the rollout of GST, marking a big step towards ‘One nation, one tax’ goal of this reform. This was one of the requests from the Chamber’s earlier study on Manufacturing Roadmap for TN, as it is bound to ensure ease of doing business.
Media mentions that the stock market is surging after GST due to price cuts by companies and tax concessions for ITC under GST. This is stated to have lifted the spirit of the investors.
Different sectors are reacting differently on GST. In the auto sector, for example, it is expected that Implementation of GST would reduce the cost of manufacturing of cars and bikes due to the subsuming of different taxes levied currently. Hence GST may be positive for the automotive sector, primarily because of efficiency and the removal of a cascading effect.”
In line with the Anti Profiteering rules, many leading auto companies have started bringing down the prices of some of the small and family cars. This, in turn is expected to boost the auto components industry. However this does not mean there are no concerns or negatives.
While the advantages may run into pages, the disadvantages are also in close competition.
Each sector has its own grievances and concerns. Though input tax credit, the most significant reform is expected to curb inflation by avoiding tax on tax, the exporters are worried about new restrictions in using credit scrips. Healthcare operating costs would shoot up and the impact will be on patients, increase in consumer durables would affect the common man, telecom sector faces pressure of increase in tax, and in the auto sector, though the effect is neutral, hybrid cars will become more expensive . The multiplicity of rates could lead to more issues and varied interpretations .
Lack of digital literacy, inability to afford the software required for GST and poor connectivity and power cuts are the key challenges for the SME sector to become GST compliant.
The number of GST returns that one need to file is 3 monthly returns totaling to 36 returns plus 1 annual return in a year which sounds mind boggling. Moreover, this applies to one state and if you function in different states, separate registration and returns are a must. The Industries in general and small traders in particular will be massively hit by these norms.
As a Chamber, we are aware that this is the biggest tax reform ever made in India. While we welcome such a historical transformation, our only concern is that there is going to be lot of initial hiccups and issues, as the businesses will be in the learning curve for some time, especially coping with multiple rates, compliance processes, and handling new technologies. Hence our request to the Government is to be empathetic and not to be punitive for any initial lapses. After all GST is not just a Tax Reform, but a Business Reform as well.
Chamber like ours would definitely render all support to our members to make this transformation as smooth as possible. We have already held various workshops for the basic understanding of GST. We are also well equipped with experts with knowledge and skill to impart sector specific trainings and to have exclusive workshops to our members on this subject. In fact, we would be more than happy to render our services to all our members and welcome the members to put forward their concerns and issues, seek our support and guidance in making the required transition in their respective organizations.
It is crystal clear, that we have to learn quickly from each other, adapt to the new system and move forward swiftly in this GST journey together.
It is a new journey for the nation. Let us work towards making it a success in our interest as well as in the interest of the country.