GST shall provide the much-needed stimulant for economic growth in India

India is known for its complex tax system. Sometimes, for new or small business it becomes difficult to walk through the right system of tax. Hopefully, with Goods and Service Tax (GST) things may set to change. We spoke to experts from various industry to know how GST will affect their sector.

In order to accelerate digitization, it is a pronounced tax reform which will now follow destination based tax structure instead of origin based. GST will surely reduce the average tax rate. By registering for all the states we are catering to, we expect ease in the business processes. Our business will surely be benefited as it will help in eliminating the spurt effects of the present tax structure and will allow free flow of goods and services within our country.

There is no immediate impact of the GST bill as everything depends on the final GST bill that will be implemented. The most important impact will be that the IT distributors need to change their distribution model to take most out of new structure. Channel managers and sales executives will be hearing less conflict issues due to price differences caused by local taxes. No matter what happens in final bill customers will be getting higher stake as they get maximum benefit and we happy with that. – Savera Digital India- Mrs. Sarita Pansari, Director at Savera Digital India

In general GST is the biggest game changer and reforms India’s indirect tax structure. The amalgamation and comprehensive tax structure introduced will surely help in boosting GDP. One India, One Market will surely allow ease of doing business within the economy, boost transparent tax structure and will reduce corruption. The Introduction of GSTN enabled software’s and new methods of electronic payments will surely help in carrying out the business process with accuracy, speediness, and seamlessness.

The services sector in India is a rapidly growing and significantly contributing sector to fiscal revenues. As indicated so far, the standard GST rate would be 18-20%, as compared to the current 15% service tax including cesses then the services and hence IT, telecom, BFSI sector may witness negative impact. It’s great that now all taxes would come under a single scheme. GST is intended to move all indirect taxes but it may create a problem in trade and commerce for the manufacturers who are manufacturing in different parts of the nation. But indeed it will surely bring transparency in the business and for the customers which will, in turn, eliminate corruption. – Edimax India- Mr. Sanjay Joshi, Country Manager at Edimax

GST shall provide the much-needed stimulant for economic growth in India by ensuring the free flow of goods and services within the economy and also eliminating the cascading effect of different taxation. It might also increase the administrative costs. One Nation, one Tax will enable abolishment of entry tax, LBT, Octroi etc. It will enable businesses to move into different geographies seamlessly. Also, with the introduction of electronic payment structure, it will ease the process of conducting business for IT companies.

GST would provide tax credit to the manufacturer. Various tax barriers such as check posts and toll plazas lead to a lot of wastage for perishable items being transported, a loss that translated into major costs through higher need of buffer stocks and warehousing costs as well. A single taxation system could eliminate this roadblock for them.   A single taxation on producers would also translate into a lower final selling price for the consumer. Also, there will be more transparency in the system as the customers would know exactly how much taxes they are being charged and on what base. –Doel International-Mr. Sudip De, Director at Doel International

GST becomes a mixed bag of better and easier rules and regulations and increased costs and compliances – Mr. Pratish Ambekar, Managing Director iLeaf Ritz Banquets, Thane

The service industry, especially the hotel and hospitality sector should have been charged with reasonable tax as they contribute largely to employment generation of the country. Taxing as high as 28 per cent on luxury and high-end banquets will have a huge impact on the sector. There was no need to impose heavy taxation and regulation on the luxury segment as this will result in people avoiding taxation and regulation by simply not registering. Subsequently, the standardize rate of service tax would be higher than the existing rates and as a result might lead to a black economy without bills.

With GST abolishing several other taxes, procedural steps have been reduced. This has also increased the chances of structuring the taxation process. GST has also brought clarity to the customers by providing them a clear picture of the tax they are paying. GST will provide an edge to the sector by reducing the costs for customers and easing seamless movement of goods and service across the nation. The amendment of GST will settle down the overabundance of taxes and will reduce the business transaction costs.

Riddance of several taxes means minimum time to process the transaction. This will also result in faster and fresher service to the customers and the booking process will an easy and smooth one.

The hospitality industry is highly distressed from the slabs of GST decided for Hotels & Restaurants. Demonetization, Ban on sale of liquor on State / National Highways and now GST on such a high quantum is a major setback for the hospitality industry. Though hospitality and tourism are slated to be the largest employment generator not only in India but also globally, it is disappointing that the government has not given any importance to the sector. It is really sad to note that after various industry association’s representations to the FM including GST Council and State / Central Government, the hotels and restaurants are badly hit by the same.  We are depressed to note that the hotel rooms with the tariff above Rs 2500 /- – Rs 5000/- and AC Restaurants with liquor bar is considered as luxury with an applicable rate of 18 % whereas non AC Restaurants are being taxed @12%. The Prime Minister, in his initial speeches, had mentioned tourism as one of the five pillars in the mandate of the new BJP government but the industry voice of making India as competitive destination has not been heard by the Government.

With this quantum of GST, we have lost all hopes of investment in the hospitality and tourism sector in the country. In fact, the tourists will move to the neighbouring countries. – Mr Garish Oberoi, Vice President FHRAI

Seemabhoi

Seema Bhoi has been contributing to the content industry through writing about brands, consulting rookies and providing content management service. She is the Co-Founder of Vibaantta Group & Meethi Lassi.