Prime Minister Narendra Modi
Implementation of the GST will be positive for India's rating as it will lead to higher GDP growth and increased tax revenues, Moody's Investors Service said today. "Over the medium term, we expect that the GST will contribute to productivity gains and higher GDP growth by improving the ease of doing business, unifying the national market and enhancing India's attractiveness as a foreign investment destination," Moody's VP (Sovereign Risk Group) William Foster said. The GST will also support higher government revenue generation through improved tax compliance and administration. "Both will be positive for India's credit profile, which is constrained by a relatively low revenue base," Foster said. Moody's has a 'Baa3' rating on India with a positive outlook. The biggest tax reform in independent India was rolled out at the stroke of the mid-night -- the intervening night of June 30-July 1 -- by President Pranab Mukherjee and Prime Minister Narendra Modi. The US-based agency expects improved tax compliance to be driven by incentivisation of tax credits in a GST system. It would also usher in greater ease of compliance through usage of a common, shared IT infrastructure between the central government and the states; and a reduction in the overall cost of compliance from simplified tax rates, uniform across the country. "We expect the net impact of GST on government revenues to be positive," Foster said. The Goods and Services Tax (GST) will remove plethora of taxes like excise, service tax and VAT and transform India into a uniform market for seamless movement of goods and services. In the GST regime, goods and services will be taxed in the either of 5, 12, 18 and 28 per cent. Besides certain essential items like health care services, salt, unpacked food grains have been kept at zero rated. KOTAK INSTITUTIONAL EQUITIES: Godot has arrived. The most significant tax reform for India will likely have its fair share of glitches post implementation. Agility on part of businesses and governments will be needed to navigate through the initial phases of uncertainty. The economy stands to gain over the long term as efficiency gains and higher government revenues translate into higher growth potential. Job creation will remain a concern as the unorganized sector shifts towards the organized sector. DELOITTE: The historic tax reform is finally here after a long wait. India has moved to a global system of taxation which has been intricately developed and formulated in close partnership and coordination with the central and state governments. India has awakened to GST and to a new era of taxation policies. The launch of GST will truly unite the country as far as taxation of goods
and services is concerned; we now hope that that the government moves to a considerate and empathetic implementation regime with a focus on making the reform acceptable to all sectors of the economy. The introduction of GST signifies the completion of all processes necessary to launch the most eagerly awaited tax reform in the country and will significantly improve the ease of doing business in India; this is a defining moment in the country's economic landscape whose benefits will accrue over the next few years. This is a defining moment for the country as the introduction of GST is a business reform intended to harmonize the indirect tax structure across the country with significant benefits for all sections of society - the focus now shifts to smooth implementation of GST. It is a historic occasion where the country has moved from a 2G tax system directly to a 4G system; from taxes that were imposed sixty years back to a new-gen information technology enabled tax system; from multiple cascading taxes to a single uniform tax. The introduction of GST signifies the government’s resolve to encourage organised businesses and ensure that tax compliance becomes a way of life and is not optional for any business. Now that GST is finally a reality, the focus would shift to a smooth implementation and making GST acceptable to all sectors especially smaller businesses so that it is successful across the ecosystem. PWC INDIA: This is a momentous occasion for us — an accomplishment to be truly proud of! As we flag off GST, although it is still far from perfect, we realise how much better it is than the myriad taxes we’ve been subjected to over the last several decades. Once the regime settles in, we can look forward to it spurring the economy by incentivizing manufacturing and making business decisions independent of taxes. BMR: With more than 80 percent of India’s existing taxpayers having successfully migrated to GST, it may be overly critical to say that the country is not ready. The key industry players have been working since the past 12-15 months towards a successful GST implementation and are at a reasonable stage of readiness. Albeit it needs to be acknowledged that few sections of the society not equipped with sufficient resources are still struggling to gear them with the fresh regime. The industry, at large, seems to be in a welcoming mode for GST, even though one would agree that the overarching public opinion with regards to GST is that contrary to the declared intent, GST would make things more complex rather than simplifying them. In the initial few months of GST implementation, companies do expect significant challenges with respect to effective delivery by various realigned IT systems and continuous changes required in processes and systems on account of the law evolving each day. It is also highly expected that many sections of the industry may not be fully compliant with various requirements of GST law from Day 1 itself and would require a transitioning period of few months post go-live date. This struggle is aggravated on account of the fact that for certain period of time; the companies will have to run parallel systems to account for existing tax transactions as well to meet the requirements of the GST regime. Lack of clarity with respect to taxability of transactions with Jammu and Kashmir is also leaving many companies unnerved. It would also be of utmost importance to carefully book all expenses and sales and map all the credits accurately in initial days of GST implementation for successful transition of all such credits to GST. While it would also be fair to say that the staggered manner in which the Government has been releasing draft
rules, rate schedules, notifications, amendments etc is making tax experts anxious, let alone the general public and the trade, the tremendous amount of work that the Government has put in for the July 1 roll-out of GST deserves appreciation. The Government has also tried to ease the pain of the industry with the introduction of relaxation for filing GST returns for the first 2 months of GST implementation. EY: The introduction of GST in India is an historic achievement and aspires toward greater cross-border collaboration and cooperation. As businesses make this transition, they should be mindful that new rules always create greater risk of non-compliance, and they should monitor the impact on pricing and margin. Given the challenges faced by businesses in adapting to this new landscape, we believe they would benefit from greater leniency in compliance requirements and related sanctions during the transitional period. While most businesses anticipate a positive impact on GDP and a more competitive economy through the creation of a single national market, they now face several key challenges:
• The short implementation period has required businesses to prepare quickly, and demands that they continue to review and monitor their compliance position.
• Heightened compliance will encourage government and others to invest with greater confidence, and will bring more sectors and businesses into the tax compliance net.
• India’s Federal and State structure makes for a complex system of taxation for businesses to decipher: GST will apply tax to inter-State activity, and will introduce multiple rates and new concepts. TAXMANN.COM: GST replaces the multiple taxes, multiple interfaces, and multiple compliances regime into one. India is moving towards tax compliant society where filing of returns will not just be easy but transparent too. This tax compliance will lead to higher revenue for both the central and state governments and enable them to fulfil their social objectives. Businesses need not worry, as the government has expressed their laxity in terms of lack of compliance by businesses or penalties that are imposed. Preparedness, completeness and readiness should be the motto of businesses from day one. It's just a matter of time that air of confusion will clear around GST and India with its resilience will embrace GST.
Ex. President Pranab Mukherjee
Prime Minister Narendra Modi