Tomorrow is going to be a historic day when Goods and Services Tax (GST) will finally come into effect. This much awaited tax reform would be one of the single largest tax reforms post-independence.
Speaking on same, Shishir Baijal, Chairman & Managing Director, Knight Frank India, said,” Much like the initial heartburns caused by demonetisation it would trigger some momentary disturbances but augur well for the industry in the long term. Among the various economic policies of the Narendra Modi-led government, this will be one of the most important milestones. So, it is a welcome move.”
Speaking on same, Avani Davda,MD, Godrej Nature’s Basket, “GST is the welcome move from the government we see a long term benefit from this historic tax reform.” Indian Retail sector is one the fastest growing industry in the world. It is expected to grow to1.3 trillion USD by 2020, registering a CAGR (Compound Annual Growth Rate) of 16.7% over the 5 years ranging from 2015-2020. India is 5th largest retail destination in the world.
Certainly, it is going to help the retailers in various ways right from reducing tax to creating seamless input tax credit the new GST reform will help them in various ways. As per cleartax data in ongoing system various wholesalers and retailers usually escape the tax liability as there is no mechanism by which their actual purchase and sale can be traced. Since under the GST regime, every invoice pertaining to taxable supply has to be uploaded on GSTN’s common portal and has to be accepted by the buyer, wholesalers and retailers will now be unable to escape their tax liability. The benefit of GST on retail sector will be huge.
GST will ease the current taxing structure as present regime includes CAT, CST, Octroi, service tax, and much more. GST will streamline everything into one single tax so that it will be easier for the retailer to understand the taxation and to pay it in one shot.
Value Fashion getting benefit
The 5% GST rate on apparel priced below Rs1,000 is expected give a fillip to the value fashion business. Post GST, the entire value chain—raw material to the finished product—will come under the tax net. Speaking on same, Hemant Agarwal Chairman and Managing Director of "V-Bazaar” Retail Pvt. Ltd, said, "The new approach of the government towards one tax which is GST is welcomed. According to me this step will be a great n good game changer for the Indian economy. Being a multi brand value chain retailer I put my fingers crossed & looking forward to it. Manufacturers & traders would surely require some time to understand the process of GST & start taking benefits from it. It may increase the inflation in a shorter period but eventually there will be a decrease in inflation.Manufacturers & traders need to pass on the benefits of excise n various gst input credits.Business houses need to be more organised under the gst regime."
Ease to logistics
As Baijal summed up, “GST would be extremely beneficial for the logistics sector. With a wave of new infrastructure taking shape in the forms of ports, roads and rail networks, the new tax regime would draw massive investments which would potentially transform the look and feel of the warehousing industry.
The impact of GST on real estate would be primarily tax neutral but loaded with gains for the affordable housing sector. The Finance Ministry has made it very clear that there should be no additional tax burden on consumers. Developers who did not get the benefit of ITC (Input Tax Credit) in the pre-GST era will now be able to avail it. Both in case of under construction projects and new projects buyers are entitled to full ITC. It would also add another strategic push to affordable housing which in turn will drive the recovery of the residential sector.
The intention of GST is to bring in efficiency in the entire tax system, the implementation of which will see lot of teething issues. But eventually it will pave the way for an extremely efficient tax system for the country.”
“There is no doubt that GST will have a positive impact on the country, its economy and the same applies to retail sector as well. In general, the retailers are likely to benefit as the prices for most of the things are likely to come down and they can expect an increase in the demand on account of lower prices. The shoppers in any case are the ultimate beneficiary of lower prices. Most importantly, GST will take a lot of hassle out of the tax collection system. So, GST is likely to be a boon for retail sector despite some teething problems one can expect,” Yogesh Huja, Founder, Freedom.Desi summed up.