GST In the Media

GST News

Cess a bad idea: Kerala FM

While the Centre has mooted a cess on “ultra-luxury items” to create a fund for compensating states in the GST regime, the states have come out against the proposal, saying it negated the principle of GST. “While the Subramanian panel had suggested a demerit rate of 40%, the Centre is now proposing a lower rate 26% for luxury items in order to create space for imposing a cess on them and mobilise resources for compensation. States want a higher rate of 30%-plus on demerit and luxury goods so that the tax rate on essential items can be brought down to 4% (from 6% proposed),” Kerala finance minister Thomas Isaac told FE. Currently, demerit goods attract more than 30%, he said. Isaac also sought a standard rate of 20%-plus.   While the crucial issue of the GST rate structure will be discussed by the council on Wednesday and Thursday, revenue secretary Hasmukh Adhia told FE that the Centre favoured a four-slab structure to start with. “We are suggesting the standard rate to be divided into two — 18% and 12%. And we propose another lower tax slab of 6% (for essential items), considering that there are about 300 items which are currently exempted from the central excise and on which VAT rate is 5%. Now, (the rate on) these items cannot be straight away taken to 12%. And the demerit goods could be brought under the highest rate of 26%,” he said. It may be recalled that the Arvind Subramanian panel had recommended a single standard rate of 18%, a 12% merit rate and a demerit rate of 40% for... read more

GST Council meet: 14% revenue growth assumed for states

In order to compute the states’ revenues losses from the goods and services tax (GST), a 14% annual growth over the 2015-16 base would be assumed in their VAT revenue over the next five years, when the Centre will be obliged to fully compensate them for these losses.   In order to compute the states’ revenues losses from the goods and services tax (GST), a 14% annual growth over the 2015-16 base would be assumed in their VAT revenue over the next five years, when the Centre will be obliged to fully compensate them for these losses. The broad contours of the compensation formula finalised here by the GST Council adds to the revenue base of the 11 geographically disadvantaged states what they forewent to run the area-based excise relief schemes, which cost them R19,000 crore in 2015-16, but not in case of other states. Also, the CST revenue in the base year with the actual rate of 2% will be added to the revenue base, and not 4% as initially demanded by the states.   Finance minister Arun Jaitley said the 14% secular rate of growth was agreed on after discussing five different formulas to compute the states’ possible VAT revenue growth in a non-GST scenario (any shortfall from this level is eligible to be compensated) These were a mutually agreed-upon fixed rate (which is what has come through); the average of the three best (high-growth) years in the past five years; and the average of median three of the last five years after leaving the two outliers. States had earlier turned down the Centre’s proposal for taking the average... read more

Government likely to overhaul CBEC structure to administer GST from April 1

(Source: – The Financial Express) The Government is likely to overhaul the central board of excise and  customs’ (CBEC) organizational structure to administer the Central GST (CGST) and Integrated-GST (IGST) from April 1, the  appointed date for rolling out the goods and  service tax (GST) regime. Under the CBEC, it is proposed to create one GST commissionerate each for 15,000-20,000 assesses and Rs5,000-crore revenue. In all, it is proposed, there would be 24 zones, 107 commissionerates, 53 audit Commiserates , 53 commissioner (appeals) and 535 GST divisions across the country. Currently, there are separate structures for the central excise and service tax administration, with 23 excise zones and 4 service tax zones. The distinctions would cease to exist when GST comes into force next year. Even though no additional posts need to be created now, it has proposed to match the existing manpower with the future requirement. While GST Commiserates would look after CGST and IGST work, they will also handle the exclusive central excise work as well as legacy issues. A directorate general for dispute resolution has been proposed too, while specialized adjudication verticals have been suggested in seven major cities. The Board of the CBEC will also undergo changes to include a member GST while carrying out other rationalizations. The extant large taxpayer units will be dispensed... read more

Proud to be part of GST, network project very complex, says Infosys CEO Vishal Sikka

THE FINANCIAL EXPRESS | 15 September 2016  Vishal Sikka, Infosys CEO, on Thursday said that the GST network project was very complex, but was proud to be part of it. Speaking to reporters after making a presentation to Finance Minister Arun Jaitley, Sikka said that there is some weakness in technology preparedness for GST network. Vishal Sikka, Infosys CEO, on Thursday said that the GST network project was very complex, but was proud to be part of it. Speaking to reporters after making a presentation to Finance Minister Arun Jaitley, Sikka said that there is some weakness in technology preparedness for GST network. Sikka said, “Technology weakness will be addressed in time to meet GST launch. We are putting in best efforts for GST.” Touted as the biggest tax reform since the Independence, Prime Minister Narendra Modi on Wednesday reviewed preparations for roll out of the new Goods and Services Tax (GST) regime, possibly from April 1 next year with Finance Minister Arun Jaitley and his team. In an interview to CNN News18, PM had said that GST was the biggest tax reform since independence and when implemented would bring about a big change. A survey conducted by market-research based business consultancy Feedback Business Consulting found that GST will attract more foreign direct investments across sectors due to tax transparency and ease of doing business. The survey was conducted among 67 companies in engineering, automotive, information technology, financial services, construction, FMCG, telecom, real estate, energy, packaging, and home appliances sectors in August. Almost all respondents opined that GST rollout will be positive for the economy. However, there might be some heart burns like inflation... read more

GST needs point-of-supply clarifications

THE FINANCIAL EXPRESS | 15 SEPTEMBER 2016 It is imperative that Internationale issues regarding this are addressed by the government in a timely manner While the service industry is required to undertake such analysis under the existing service tax regime as well, it would be completely new for the manufacturing/trading industry.  With GST round the corner, companies are already reviewing and analyzing the actual impact on their supply-chains. Unlike the existing regime, GST would be a destination-based consumption tax and the tax would accrue to the state where the goods/services are consumed. In this regard, the Model GST law lays down detailed provisions with respect to determination of actual ‘place of supply’ (PoS).  While the service industry is required to undertake such analysis under the existing service tax regime as well, it would be completely new for the manufacturing/trading industry. The correct determination of PoS would be critical to enable identification of whether a supply (of goods) transaction is an inter-state transaction chargeable to ISGT or intrastate transaction chargeable to CGST and SGST or a zero-rated exports transaction. The onus for such determination is on the supplier and any wrong characterization would mean incorrect payment of taxes. The model GST laws currently do not provide for any mechanism for self-adjustment of incorrect payment of taxes. Accordingly, in such a situation the supplier would be required to first deposit correct IGST or CGST/SGST (as the case may be) and claim refund thereafter. With this background, it is pertinent to note that in terms of the model GST laws, the PoS for transactions involving movement of goods, whether by the supplier... read more

GST: Government works on 4-slab rate, exemption for 50 per cent goods and services

The Indian Express | 15 September 2016 AHEAD of the first meeting of the Goods and Services Tax (GST) Council on September 22-23, the Government is of the view that the basic tenet of the GST regime would be that it is “pro-poor” with 50 per cent of essential goods and services exempted from any tax. The tax exclusion to nearly half the goods and services, an official said, would be “optically and politically correct” for the NDA government as already 300 items in the Centre and nearly 80 items in the states have this exemption.  At a review meeting Wednesday that discussed the run-up to the rollout, the consensus seemed to be that the new tax regime should not put fresh inflationary pressure and backed Revenue Secretary Hasmukh Adhia’s proposal of a tax band of 8 to 26 per cent with four rate slabs.  Sources said it was suggested that proposed slab rates of 8, 10, 18 and 26 per cent be tweaked to 10, 12, 16 and 25 per cent so that it did not affect revenue earnings and kept states on board as the final call has to be taken by the GST Council comprising state Finance Ministers and headed by Finance Minister Arun Jaitley. Adhia was asked to rework the rates and their revenue implications for both Centre and the states and present the data at the next review meeting likely this week.  There is a widespread demand for keeping the GST rate low with the Congress calling for a cap of 18 per cent. The Arvind Subramanian panel had recommended a three-rate structure with essential goods... read more

Petroleum products to enter under GST regime to fuel big gains

THE ECONOMIC TIMES | 14 SEPTEMBER 2016  Petroleum products, including crude and some intermediate products, could be taxed under the proposed goods and services tax (GST), a move that will reduce the imperfections in the new levy and also narrow the inflationary impact of the tax. A proposal favoring imposition of a modest tax on these products is being examined and is expected to be taken up by the newly constituted GST Council where the government will try and convince states of its merit. The idea is to have some minimal tax of about 2-3 per cent so that seamless flow of credit is not broken and cascading is removed. These products are at present proposed to be covered within the GST but zero rated till the time the council decides to impose a tax. States will continue to have freedom to levy local sales tax on it. States have been opposed to a change in tax regime for petroleum goods, an easy way of quickly mopping up revenues if needed. But now thinking has veered around to having some minimal tax from the beginning as it could help in bringing down the overall tax rate and allow the industry to get credit. The Arvind Subramanian committee has recommended a standard GST rate of around 18 per cent. There are concerns GST could stoke inflation. ET had reported some policymakers are in favour of rate as low as 16 per cent. Tax at marginal rate would not hurt consumers much but will benefit industry in a big way. “If the petroleum products are taxed at a GST rate which... read more

E-commerce companies demand exemption from GST

THE ECONOMIC TIMES | 30 AUGUST, 2016 The rapidly expanding e-commerce companies today made a strong case for keeping them out of the proposed GST net but the state finance ministers appeared in no mood to oblige. At the first meeting of the Empowered Committee of State Finance Ministers held after the Parliament approved the GST Bill, online retailers said they only provide a ‘platform’ to vendors and customers and do not make money out of sales made. According to representation made at the meeting, companies like Flipkart, Amazon India and Snapdeal are only ‘service providers’ to the vendors and as such are liable to pay GST only on service income. When panel chairman and West Bengal Finance Minister Amit Mitra questioned the billion dollar valuations some of the so-called online platforms command, the e-retailers said their source of revenue is advertisement on which they pay service tax. Vendors selling goods through their portals should be liable to pay GST, they argued. NASSCOM in its representation said the sector is creating huge job opportunities and allowing small industries to sell their products. Stating that e-commerce facilitates competition, it said in the sector, one cannot avoid being in tax bracket. Mitra however said the discussions so far have concluded that the e-commerce sector is generating millions of dollar but pay practically no taxes. According to Mitra, consumer buying products online pay VAT, producer pays excise duty but these companies go untaxed on the pretext that the transaction is just a pass through. But their business is USD 6-8 billion. “E-commerce brings in competition, but you are also adding some value.... read more

GST to help make economic-commercial transactions more efficient

THE ECONOMIC TIMES | 12 September, 2016 Goods and Service Tax (GST) touted as a major policy initiative is expected to integrate the current island of regional commerce into `One India’ market, making economic-commercial transactions more efficient, and pave the way for a national market for commodities, as envisaged in the Economic Survey 2015. It will complement the commodity derivative markets’ attempt to create `one national market’ with a benchmark price for the given commodity that it attempts to discover through `nation-wide’ participation. Like others, the Indian jewellery sector too is hopeful that GST would re-energize the sector, even as GST details dealing with sector are yet to be fully known. Currently, differential state-level taxes such as VAT, Octroi and others distort pricing of gold jewellery which otherwise should be based on inherent value that is gold content and craftsmanship.The GST is likely to propose uniform tax rates across the entire jewellery sector bringing all value chain participants located across the country under one single umbrella. Thus, it will make the inherent competitiveness of national value chain participants a factor to reckon for their success than a taxation structure that may favor a set of players and geographies. As it is expected to benefit the logistics sector, the gold jewellery sector will also benefit from increase in logistical efficiency in national jewellery movement post GST implementation. Currently, a significant cost in trading of jewellery across states arises due to taxes imposed on inter-state movement of jewellery (no tax credits). Additionally, jewellery attracts Octroi when they enter the civic limits of certain cities. Also, under the current regime, VAT paid... read more

GST bill gets nod from President Pranab Mukherjee

THE ECONOMIC TIMES | 08 September, 2016 The legislation amending the Constitution to enable goods and services tax (GST) has become a law with President Pranab Mukherjee giving his assent to the bill ratified by more than 50 per cent state assemblies. This is a significant milestone achieved in the implementation of GST that sets the stage for GST Council, which will work out the details of the tax, including the rate at which it will be levied. The President has signed it, a government official said. The Constitution (122nd Amendment) (GST) Bill allows for introduction of GST that will replace multiple indirect taxes levied by centre and states, creating one national market that is expected to bump up GDP by as high as 2 per cent. Once the date of the new tax is notified all state and central taxes that it subsumes will cease to exist.The government is looking to implement the new tax regime from April 1, 2017. Finance Minister Arun Jaitley had on Wednesday said that though this is a stiff target, he would give it a try. “If we look ahead, its (April 1, 2017) a very stiff target we are running against time. I would certainly like to give it a try,” Jaitley had said. Parliament had on August 8 passed the bill that was then sent to states for ratification. Such a constitution amendment bill requires at least half the state assemblies to ratify it before president’s assent is sought. The GST Council, a body of states and Centre, is expected to be constituted shortly with Union finance minister as its chair... read more

Rules may be eased for banks and NBFCs under GST

THE ECONOMIC TIMES| 09 September, 2016 The government may look at relaxing some rules in the goods and services tax (GST) framework that could make life a little easier for banks, NBFCs and insurance companies, people in the know said. In the revised model law set to be released in the first weeks of October, two main changes — single registration and centralised audit — may be announced for banks, NBFCs and the insurance companies, a person close to the development said. “While it has not been finalized how exactly would the government go about it, broadly there seems to be a consensus that banks, especially large ones, would find it very tough under GST,” he said. Under the current GST framework, banking and financial companies will have to register all their branches in a state separately, and treat them as separate entity. This is set to make registering and then calculating GST in each transaction in every branch complicated. A centralised registration would mean the bank would be registered with a central agency, and a separate agency would audit it. This agency would audit the transactions where revenues would be pooled, analyzed and a GST be levied thereafter and then distributed to the states as per the calculation and where the transaction occurred. The centralized auditor, and not the banks, NBFCs and insurance companies, would be responsible to disseminate the tax to the states, saving a lot of headache, say experts. Industry trackers say that currently under the GST framework the burden of compliance for banks, NBFCs and insurance companies, especially with a pan India footprint would be... read more

Narendra Modi government may back 18-19% GST standard rate

THE TIMES OF INDIA | 13 September, 2016  NEW DELHI: As the Centre and states kick off consultations to decide the crucial rate for the goods and services tax (GST), the Modi government is all set to back a pocket-friendly rate, amid indications that a standard rate of 18-19% might receive the government’s backing. On Monday, the Cabinet cleared the establishment of the GST council, the panel headed by the Union finance minister with all state FMs as its members, setting the stage for nuts and bolts issues to be thrashed out with the government setting a two-month window for the exercise. States such as Kerala have been vocal in suggesting the levy should be upwards of 20% to ensure that state revenue collections are not impacted by the GST rollout from April. “We need to ensure that the basket that makes up the consumer price index is not affected. The message is clear that gareeb ki thali (poor man’s plate) should not get expensive. The CPI (consumer price index) basket will not be impacted. There is commonality of focus (between the Centre and states) on this,” said a source, adding that the rate could be lowered but not raised at the expense of the common man’s “thali (meal)”. Sources said the Centre would in any case compensate the states for any revenue loss for five years on account of GST implementation but added that the negotiations would be challenging. A consensus will quicken GST rollout but a stalemate over the rate and other issues such as exemptions, compensation formula and nitty-gritty of draft legislation will require more political negotiations. The... read more

GST implementation: What exactly does the formation of GST Council Mean?

FIRST POST.BUSINESS | 13 September, 2016 The biggest tax reform of the country, Goods and Services Tax, is now a step closer to implementation with the Cabinet approving the formation of the GST Council headed by Finance Minister Arun Jaitley. Here’s is a lowdown on what is the way ahead:  What is the GST Council? The GST Council will decide on the tax rate, will recommend the taxes to be subsumed and exempted from GST, the rates of taxation and the model Central, State and Integrated GST laws. It is the council’s responsibility to have one uniform rate of GST tax to be introduced all over India. It will also decide the threshold for levy of the tax, as well as the dispute resolution mechanism. Apart from these, it will also decide special rates during adversities and special provisions for some states. The government has notified 12 September as the date for setting up of the GST Council which will be completed within 60 days. What is the structure of the Council? The Council will be chaired by Finance Minister Arun Jaitley, and have a Minister of State for Finance. It will have state finance ministers as its members and representatives from two Union territories. While the Centre will have one-third vote, states together will have a two-third say. To adopt a resolution, three-fourth majority would be required.  What lies ahead? The states and the Centre have to draft the Central GST, State GST and Integrated GST laws. These laws have to be passed by Parliament and respective legislatures. The CGST and IGST will be drafted on the basis... read more

On fast track, Centre approves GST panel

THE FINANCIAL EXPRESS| 13 September, 2016 With the necessary constitutional amendment in place, the Union Cabinet on Monday approved the formation of the all-powerful Goods and Services Tax (GST) Council and set a virtual deadline — November 22 — for it to resolve a clutch of contentious issues: The GST rates, the business turnover thresholds for the new tax, the exemption list, the contours of the model GST laws, the way existing tax sops like area-based exemptions with sunset clauses would be grandfathered and the place of supply rules for revenue appropriation among states. While the Centre is still open to views from the business community regarding their preparedness for meeting the April 1, 2017 target for the GST launch, it is nevertheless moving on a fast track, so that any lapse on its part won’t delay the new comprehensive, destination-based indirect tax on consumption. GST could potentially bring economic dividends for the country and hence, political ones for the ruling National Democratic Alliance. The GST Council’s first meeting would be held on September 22-23 in New Delhi, revenue secretary Hasmukh Adhia said, adding that it would have two months to decide on all structural issues. “We are happy that we are running ahead of the time schedule. We have to call as many meetings of the council and sort out the issues, so that we are ready with the draft law,” he said. Asked whether the Centre was sticking to the April 1 deadline, Adhia responded, “So far, yes.” The GST Council secretariat, to be fully funded by the Centre, would consist of an additional secretary and four... read more

Will GST have an impact on the real estate sector?

LIVE MINT | 4 August 2016 New Delhi: The goods and services tax (GST), cleared by the Rajya Sabha on Wednesday, is expected to benefit the real estate industry, though the impact will depend on the final GST rate. “The enactment of this law will single-handedly solve many of the challenges faced by the real estate sector and help in pulling the sector out of its long slumber,” said Parveen Jain, president of the National Real Estate Development Council, an autonomous industry body under the ministry of housing and urban poverty alleviation. The real estate industry contributes about 7.8% to India’s GDP and is the second-largest employment generator after the IT industry. However, the direct impact of GST on real estate, in terms of tax outflow for developers and consumers, will depend on the final GST rate. “It will be important to see what the final rate of GST would be because if the rate is higher than the existing cumulative taxes, it will certainly be a dampener as it will increase the final cost for buying an under-construction flat and defeat the purpose of the bill,” said NehaHiranandani, director, House of Hiranandani, a property developer based in Mumbai. After a majority of states approve the constitutional amendment, Parliament will need to pass another bill to implement the tax. Finally, a GST council made up of federal and state officials will decide the overall rate, which may vary for different goods. “While it is still too early to definitively predict the bill’s impact on the real estate sector, we can expect the sector to benefit in the long term... read more

GST: The road ahead for industry

LIVE MINT | 4 August 2016 Judging from recent developments, it appears that the government is set to meet its target of implementing the goods and services tax (GST) with effect from 1 April 2017. Even if the deadline is extended, it will be close to the date that the government has been working on. GST represents not just a change in the tax regime, but a business transformation. Its introduction will necessitate a review and change of tax positions, the supply chain, enterprise resource planning (ERP) systems, business processes and accounting, among others. Industry has very limited time to implement the changes. After the introduction of GST, there is likely to be an increase in tax compliance obligations. Today, a service provider with operations, say in 20 states, can obtain a single centralized service tax registration, whereas under GST, separate registrations may have to be obtained in each of the 20 states. A service provider who would currently be filing only three service tax returns a year would have to file four or five returns per state per month, which amounts to about 100 returns per month, after the transition to GST. A manufacturer with two factories and operations in 20 states would have 23 registrations currently (two excise, 20 value-added tax, or VAT, and one service tax) whereas under GST the number of registrations would go down to 20 (1 for each of the 20 states). But the number of returns would increase from 22 on a monthly basis (two excise returns and 20 VAT returns) and a service tax return on a half-yearly basis to about... read more

Lot of inefficiencies will be eliminated once GST is passed: Arvind Panagariya

THE FINANCIAL EXPRESS/ 3 AUGUST 2016 Arvind Panagariya on Wednesday said that a lot of inefficiencies will be eliminated once GST is passed. In an interview to CNBC-TV18, Panagariya said, “first obstacle for the government to cross, is to get the Constitutional Amendment Bill passed. “I expect GST to bring in simplification in indirect taxes and will make tax processes more quick and will further help the level of gross domestic product (GDP) and the rate at which India grows”, he added. However, the passage is not the end of it all. Lots of reforms are under process and it’s time we looked at GST as a larger package of reforms that the government is undertaking, Panagariya highlighted. The bill, which has already cleared LokSabha, is likely to be sent back to the lower house after it gets passed in the RajyaSabha. This is due to some amendments that the government has agreed to make in the GST Bill to get support of political parties, especially Congress. Finance minister ArunJaitley, at a meeting with his state counterparts last week, promised to keep the incidence of tax low while safeguarding the revenue of the states. With the government also assuring support to states in terms of compensation for resulting revenue loss, the GST Bill expected to see a smooth passage today. For the Bill to sail through the RS, two-thirds of its members (among not less than 50% present) should vote in its favour. While the ruling National Democratic Alliance has 72 members, several major non-NDA parties like SP, NCP, Trinamool, JD(U), CPI(M), etc, are inclined to support the Bill... read more

GST Bill: The story so far

THE HINDU/ 3 AUGUST 2016  GST Bill: The story so far Budget In Budget 2006-07, P. Chidambaram, Minister of Finance of the UPA II proposed implementation of Goods and Services Tax (GST) by April 1, 2010. Comprehensive GST A consumption based tax, the idea was to do away with the complications afflicting the current system of taxation. In a comprehensive GST regime all the transactions would be liable to a single unified tax. Joint Committee A joint committee comprising adviser to Finance Minister, State Finance Ministers, finance secretaries and bureaucrats was set up in 2007. It submitted its report on the vision for GST the same year. Report to Empowered Committee The Empowered Committee of State Finance Ministers submitted its final report to Empowered Committee whose report inturn was the backbone for drafting the Bill. › Constitution Amendment Bill In 2011, UPA II moved a Constitution Amendment Bill in Lok Sabha. It was referred to Parliamentary Amended Bill In 2014, the NDA moved an amended Bill taking into consideration the suggestion made by the Parliamentary committee. The Bill was cleared in the Lok Sabha with the support of regional parties, while Congress opposed it in the present form. RajyaSabha After several deliberations it is set to face the Rajya Sabha hurdle. Number games Parties and States, big and small, have been pledging support to the GST Bill. So why was the BJP still trying to convince Congress to vote in favour of it What’s left for the GST to become a reality? All States, except TN, support GST “Virtually all the States have supported the idea of GST today... read more

GST rollout to make household jewellery 18% cheaper

BUSINESS STANDARD | 4 August 2016 The implementation of the Goods and Services Tax (GST) Bill is set to make household jewellery 18% cheaper, which in turn will discourage sales of used ornaments freely to jewellers. Jewelers’ will not get input credit on gold procured through melting of used jewellery. Hence, they will prefer to pass on the loss to customers. Since, GST is mulling 18% tax on gold ornaments, jewellers will get 18% lower input credit. On passing 18% lower input credit, customers will get lesser amount equivalent to the tax. Hence, customers will get 18% lower realisation from their used gold jewellery, said Surendra Mehta, secretary, India Bullion and Jewellers Association(IBJA). Gold recovery through melting of used jewellery stands between 5% and 10% in India, depending upon price volatility. In case of price rise, quantity of used jewellery increases. Scrap jewellery collection declines with fall in gold prices. Customers are bound to get discouraged from used jewellery sales as their realisation will fall 18% following the GST rollout. The realisation will go down further in case customers are not aware of current prevailing gold price, said Prithviraj Kothari, Managing Director, RiddiSiddhi Bullions. Interestingly, jewellers might save more through unethical practices, an industry veteran said. Since most jewellery sales take place in distress, jewellers might take advantage of the situation in the name of GST, he added. Jewellers avail input credit from banks as working capital in commensurate with gold collected through melting of scrap... read more

GST to reduce costs for retailers, boost consumption

BUSINESS STANDARD |4 August 2016 The goods and services tax (GST) is expected to reduce distribution costs of retailers, improve the speed to market and boost overall consumption. “Retail is the last leg of economy and GST will help retailers by removing cascading effect of taxes,” said Kishore  Biyani, group chief executive officer of Future Group. Biyani said GST would help retailers in a big way as they do not get input credit on many costs such as service taxes. “Now, the informal economy will become formal economy,” he said. Kumar Rajagopalan, chief executive officer at Retailers Association of India, said: “The GST will reduce distribution costs and reduce wastages as cascading effect of taxes will go.” He said “the speed to market” would increase, as retailers can produce wherever and sell wherever to meet the demand of consumers. “More importantly, the availability of products will improve for customers.” Many in the industry said retailers can centralise their storage and supply chain as GST aims to remove the complexity of multiple state and central taxes and a multitude of exemptions and ensure a seamless flow of input tax credit in the value chain “It will reduce taxation on most products. If there is pass-through to customers, it will lead to higher consumption of products and is good for everybody in the value chain,” said Harminde rSahni, managing director at Wazir Advisors, a business consultancy. He said the logistics costs for companies were expected to go down by 8 to 10 per cent. “Overall, prices will come down by 1 to 2 per cent.” According to Nomura, certain negatives exist... read more
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