Ease of doing business ranking may take a hit

NEWDELHI: The confusion and frequent alteration of tax rates of products under the goods and services tax (GST) may dent India’s hopes of improving its ranking on the Ease of Doing Business chart brought out by the International Finance Corporation.

Despite the continuous reform process undertaken by the government, India was placed at 130 among 190 countries last year, just one notch above the previous year’s ranking.

One of the major thrust areas of the NDA government was focus on ease of doing business in the country and thereby improving its ranking. The government aimed to be among the top 50 countries in relation to the ease of doing business.

“GST was meant to create one nation one tax but the existing uncertainty over tax rates and the problems faced by the businesses in filing returns will have a direct impact on the ease of doing business index..GST was meant to make things more seamless,” Soumya Kanti Ghosh, chief economic adviser of the State Bank of India group told HT.

A KPMG report said that the industry has to go through the cycle of re-fixing final consumer prices if GST rates are revised within two months of its launch. Besides, businesses that are affected would have to communicate the changes through the supply chain and revise consumer demand projections and realign discounts and marketing policies. “Making changes so often also gives an impression of uncertainty in doing business in India, which had always been a complaint of global businesses,” the report said.

“There is confusion not only over GST rates but also the portal (where businesses need to file their sales records) has not been working and it is unable to take the load, which is creating more problems for the industry and these need to be addressed at the earliest,” Waman Parkhi, partner, indirect tax, KPMG said.

The gross mismanagement has hit medium and small traders the most, as they have no advisors to help them tide over the crisis.