Home Retail India Inc hails implementation of GST

India Inc hails implementation of GST

By  
SHARE

The Goods and Services Tax (GST) is on schedule for implementation from July 1. Hailed as the biggest tax reform since India’s independence, GST will replace an array of central and state levies with a national sales tax, thereby creating a single market and making it easier to do business in the country.

India Inc hails implementation of GST
As per an analysis about 1,211 goods and 36 services have been so far classified under GST out of which nearly 50 per cent goods have been placed under 18 per cent rate

The GST Council, which had previously finalised a four- tier tax structure of 5, 12, 18 and 28 per cent, met on Saturday to put different commodities and services in the decided tax brackets.

As per an analysis about 1,211 goods and 36 services have been so far classified under GST out of which nearly 50 per cent goods have been placed under 18 per cent rate, 14 per cent goods under 5 per cent rate, 17 per cent goods under 12 per cent rate and 19 per cent goods under 28 per cent rate.

The GST Council has also announced tax bracket for items like Textiles, Gem & Jewellery, Footwear etc.

“Gold currently has an excise of 1 per cent and state charge around 1 per cent VAT… keeping these various taxes in mind, and after a lot of debate in the GST Council, we have finally reached a consensus on 3 per cent for gold and gold jewellery,” Union Finance Minister Arun Jaitley, who heads the Council, told reporters here after its 15th meeting.

Besides, rough diamonds will have a nominal tax of 0.25 per cent in order “to keep the audit trail” of transactions, he said.

Footwear costing below Rs 500 will be taxed at 5 per cent, while those costing more will attract 18 per cent.

Regarding items of use by the common man, Jaitley said that even manufactured apparel costing less than Rs 1,000 would be taxed at 5 per cent.

“Packaged food items sold under registered trade marks, which are sold at a much higher price (than food) would carry a rate of 5 per cent,” he said, adding biscuits, both of cheap and expensive varieties, would be taxed at 18 per cent.

Here is how India Inc has reacted to the implementation of GST:-

, President South Asia, Bata

“India is finally on the verge of historic GST roll out and we are ready to support the Government on the same. The GST rate of 5 per cent for footwear below Rs 500 will help keep good quality, branded footwear within the reach of the masses and we feel it is a good step. Also the 18 per cent GST on footwear above Rs 500 is in line with our expectations and will not be an impediment in our commitment of providing stylish and comfortable shoes to everyone at a wow price.”

Saurabh Gadgil, Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association

“The declaration of GST for the Gems and jewellery sector at 3 percent for gold articles and polished diamond and 0.25 percent on rough diamond is very positive move by the government. It will give a thumping boost to the organised players and organised trade, it is also a boon for the consumer, furthermore the government will also benefit as more and more players will turn towards organised trade by complying to GST. Currently we feel it is a win-win for everyone.”

, Category Head,

“The GST rates for cakes at 18 per cent, rusk at 5 per cent and namkeen at 12 per cent is satisfactory. This shows that the Government is considerate of consumer sentiments and wants to ensure that GST does not lead to inflation.”

, Chief Financial Officer,

“At Mother Dairy, we don’t see major implications due to the newly announced GST rates. The bulk of our products such as liquid milk and fruits & vegetables, remain exempted from the current tax regime. Additionally, our Dhara edible oil portfolio remains unaffected as per the new guidelines. Tax on butter and ghee will impact industry adversely specially white butter which is used as an ingredient in milk, while milk is exempted under the new GST regime.

As a company, we are currently working towards ensuring the last mile compliance with GST, by covering various stakeholders involved, within the stipulated timeline.”

Abhishek Bansal, Executive Director,

“This is indeed a significant step towards indirect tax reforms. Apart from reducing the general expenditure burden on the customer the bill will enable ease of doing business with greater transparency and mobility across state borders. Since multiple taxes will be replaced by a single tax, in the real estate sector new constructions will stand to benefit. GST is one of the critical tax reforms which has potential to facilitate one single market in India for goods & services and will boost country’s economy significantly. The government is relentlessly preparing the economy for a seamless GST implementation. Given this, it is vital that the retail industry also gears up for the GST so that a smooth and unhindered shift to the landmark tax reform can be duly achieved.”

Bhawna Agarwal, CEO, Gadgets 360

“The new GST slabs would challenge the dynamism of e-commerce players. Since a lot of cost and tax structures are getting impacted, it will be interesting to see how vendors manage their expenses and how well E Commerce players adjust to the same.”

Ritesh Agarwal, Founder & CEO,

“We welcome this step by the Government. A lower tax rate for budget hotels sector will ensure that the industry’s quality upgrade continues while delivering standardized accommodation to millions of middle-class travellers. This will also save and create thousands of new jobs which could have been impacted under higher tax-rates. Hotels are the single biggest contributor to tourism industry which accounts for 7.5 per cent of the GDP. The move will boost revenue from Travel & Tourism sector for the next many years. The industry is expected to contribute 280 billion dollars to the GDP by 2026 and will pass on benefits of uniform taxation across the country to travellers. I would also like to thank the hundreds of people who worked behind-the-scenes to ensure that concerns and representations of budget hoteliers were heard at the highest levels of government. From FICCI which activated regional chapters to sensitize stakeholders, to our partner hoteliers across 16 states, and friends in the media who championed this cause – this outcome wouldn’t have been possible without their tireless efforts.”

, Head Business Development, Desai Brothers Ltd – Food Division (Mother’s Recipe)

“Goods and Service Tax (GST) is pegged as one of the biggest and most anticipated tax reform in our country. The Government is continuously ensuring a favourable business climate in India and one of their initiatives is the GST, which promises to integrate India’s multi-layered indirect tax system into a single unified one, improving the ease of doing business on a large scale in India.

FMCG which is one of the fastest growing sectors in the Indian economy is also expected to benefit from GST. At the backend, the proposed unified tax system will reduce transportation cycle times, enhance supply chain decisions and consolidation of warehouses.

However, the current taxes levied are in the range of 6-8 per cent VAT plus 2 per cent excise but with the roll out of GST the taxes applicable will be 18 per cent. A 10 percent increase in taxes will directly impact business growth & profitability, especially for price sensitive food categories. We anticipate the business to take a hit for the initial few months because of reduction of inventory, and volumes may be impacted even after that for certain categories where the taxes have increased. Price corrections are also estimated with the increase in taxes by 10 per cent for various categories like pickles and pastes. Furthermore, the pending stocks with distributors and warehouses on July 1 will result in losses for the company.”

, Secretary General, Confederation of All India Traders

“Much preparedness is required at the level of traders. Obviously many challenges will occur which needs to be sorted out and as such trial period is required.”

Somasundaram P.R., Managing Director India,

“It is an encouraging step in the current context to stabilise the industry and address the concerns of the millions employed in the industry.”

, Chairman, The Cotton Textiles Export Promotion Council (TEXPROCIL)

“The 5 per cent was is very progressive and will lead to the growth and development of the entire value chain.”