Prime Min­is­ter Naren­dra Modi

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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.

Prime Min­is­ter Naren­dra Modi

Ex. Pres­i­dent Pranab Mukher­jee

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