GST scores high on ease of doing business
The Economic Times , Jul 02, 2018
The goods and services tax (GST) has ensured formalisation of the economy and improved mop-up, delivering seamless convergence under the one-nation, one tax theme, said industry champions, unanimously calling it an enabler of ease of doing business. With uniformity of rates and elimination of multiple other indirect taxes, GST has cut out the cascading of levies, widened the tax net and added to revenues. Introduction of the e-way bill has improved the system by reducing transport and logistics costs, said industry leaders.
GST is a “massive and transformational reform,” which is bringing long-term gains to the Indian economy, said Rakesh Bharti Mittal, Confederation of Indian Industry (CII) president and vice-president, Bharti Enterprises. “GST represents a model of cooperation, consensus and convergence and is an exceptional and unique achievement.”
Explaining that GST did not just mean a difference in the tax rate but changes in the entire ecosystem of the IT setup, supply chain, procurements, billing patterns and exports, EY partner Bipin Sapra said GST now doesn’t appear to be the difficult mountain to climb that it had earlier. Compliance has eased, refunds have started to come in for exporters, antiprofiteering is being introduced with caution and the e-way bill mechanism has rolled out smoothly.
“GST is a key enabler to bring simplification in the indirect tax system and is expected to end all the complexities the industry has been dealing with,” said YK Modi, executive chairman, Great Eastern Energy Corp.
The exports sector, too, has given its approval to GST — despite its refund challenges — as it has reduced cost of manufacturing and logistics through complete rebate of input taxes on all goods and services. In a CII survey of 300 respondents, 83% said implementation of GST was in the right direction, while 65% were satisfied with its overall implementation.
RATIONALISE RATES, WIDEN COVERAGE
At a time when Malaysia has abandoned GST, the industry is confident of India’s regime settling in seamlessly, but wants lesser rate slabs and inclusion of all sectors in the tax’s ambit. Currently, there is a multi-tier rate structure, with five broad categories of 0, 5%, 12%, 18% and 28%. However, rough diamonds and precious stones are subject to 0.25% GST while a 3% tax is levied on gold and silver. However, rough diamonds and precious stones are subject to 0.25% GST while a 3% tax is levied on gold and silver. Demerit and luxury goods, which fall in the 28% tax slab, are subject to an additional cess of 1-15%.
Rashesh Shah, chief executive, Edelweiss Group, urged the government to make GST a simple and transparent system with reasonable rates and a minimum number of slabs. “GST’s ambit must also be extended to (currently) excluded items, such as petroleum products and real estate,” said Shah, who is also FICCI president.