GST bill passed: Here’s how industry reacted
4 min read 04 Aug 2016, 10:29 AM ISTWhile it is difficult to quantify the impact on various sectors until the government announces the final GST rate, here is what the industry leaders predict
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New Delhi: The Rajya Sabha finally passed the controversial goods and services tax (GST) law late on Wednesday, paving the way for a new tax regime in the country.
While it is difficult to quantify the impact on various sectors until the government announces the final GST rate, here is what the industry leaders predict.
Rajeev Dimri, leader-indirect tax, BMR and Associates
“The major central and state levies to be subsumed into GST constitute 25% to 40% of the price of products, with certain categories being taxed at lower rates. There could be a reduction of tax incidence for several product categories if the standard GST rate is in the range of 18%-20%. Headline tax rate on services is likely to increase as these are currently taxed at 15% even though expansion of the input credit base should partially offset the increase."
S.G. Murali, CFO, TVS Motor Co.
“We expect cost of goods to come down depending on the revenue neutral rate (at which no revenue loss will be incurred by the Centre or the states) and that will boost growth. Manufacturing companies can consolidate their warehouses and have fewer central warehouses at strategic locations instead of multiple stocking points in each state. With this, the working capital requirement can come down."
V.S. Parthasarathy, group CFO, Mahindra and Mahindra Ltd
“Manufacturers can now concentrate on their main business of production without the complexity of multiple tax compliances. I’m also sure that given the dynamism of the government, it will certainly pay attention to the request of our IT sector for a differentiated approach under GST."
Also Read: One nation, one tax as Rajya Sabha clears GST bill
Sugato Sen, deputy director general, Society of Indian Automobile Manufacturers (SIAM)
“GST will be helpful for the entire manufacturing sector as embedded taxation will be done away with. Clarity on the impact on the car market will emerge once the RNR (revenue neutral rate) is firmed up."
Krish Iyer, president & CEO, Walmart India
“Implementation of GST is likely to reduce transaction cost of doing business. I am confident that once implemented, it will not only bring relief to the consumers, but also help the retail sector in a big way."
Rahul Singh, founder of Beer Café, and honorary secretary, National Restaurants Association of India
“There’s proposal for high GST (around 30-40%) for aerated beverages which constitute a significant part of bills of quick service restaurants. This will have an impact on consumers. On the other hand, alcohol is kept out of the purview of GST. This would give room for states to have their taxes. Ultimately, cost is always passed on to consumers."
Anirudh Dhoot, director, Videocon Industries
“It is a win-win for both the honest tax-paying consumer and manufacturers. This bill will definitely change the scenario for consumer durables in the country as it will pave the way for progressive growth."
Ashok P. Hinduja, chairman, Hinduja Group of Companies
“GST will be the biggest reform since 1991, which will make India an attractive destination for foreign investments. Manufacturing will get more competitive due to the emergence of a national market as against the present fragmented one. Roll-over on the 1st of April 2017 may affect the last quarter business of 2016-2017. Hence, implementation during mid 2017-18 would be ideal and preferable."
Prakash Chhabria, executive chairman, Finolex Industries Ltd
“GST implementation will help improve the competitive positioning of the organized sector and hasten the shift from unorganized to organized sector in the PVC pipes industry."
Also Read: GST: The road ahead for industry
Mohan Goenka, director, Emami Ltd
“We remain neutral to GST as we have both ayurvedic and cosmetic products and we do not know what classification will apply to us. The question is under what rate we will fall. For ayurvedic products, the current VAT (value-added tax) rate is around 4% and for cosmetics, it is 12.5%."
Ashish Goel, CEO and co-founder of Urban Ladder
“GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country. Additionally, it will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs. Overall, GST is going to be a game changer for most industries and especially for e-commerce."
Harshavardhan Neotia, president, Federation of Indian Chambers of Commerce and Industry
“GST is one of the most-awaited reform measures by the industry. It is noteworthy that the principal opposition party has played a constructive role by articulating some of the concerns which have been noted by the government and would help form base of a robust GST framework for India.
Anil Yendluri, director & CEO, Krishnapatnam Port Co. Ltd
“Implementing GST would lead to tremendous reduction in the overall transportation and logistics costs. This translates to lower transit time and high rail-road utilisation by way of seamless inter-state movement of goods."
Alok Tandon, CEO, INOX Leisure Ltd
“The Indian cinema industry has been taxed as a vice by a host of regulatory bodies including local, state and central authorities at extremely high rates which have stunted the growth of the industry. We are hopeful that subsuming of all these taxes under GST will ease the pressure on the industry and allow it to grow to its full potential."
K. Ravichandran, senior vice president, co-head, corporate sector ratings, ICRA Ltd
“Implementation of GST will be positive for some of the port logistics players as it will lead to a realignment of their warehousing and supply chain requirements. Paint companies will be significant beneficiaries of GST rollout as their effective tax rate will reduce to about 18% from 26%-28%, some of which could be retained by the industry due to their brand strengths."
Also Read: Will GST have an impact on the real estate sector?
