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Benefits of GST for the world of retail

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Goods and Services Tax (GST) is a comprehensive tax levied on the manufacture, sale and consumption of goods and services at a national level. Under GST, there will be no difference between goods and services. It tries to eliminate indirect taxes and mitigate cascading or double taxation issues and leads to a common national market, with elimination of state boundaries.
The execution of GST in India emerges from the complications of the current tax system of the country. GST targets to minimise the hitches in double taxation: primarily eradicating cascading tax and smoothing the fl ow and structure to make it more seamless and organised. It will assist in making full input tax credit possible at central and state level. GST would also help to restructure interstate transactions. It will focus on streamlining the taxation methods at different levels across all the states in the country and between the states and central government. One of the merits of this would be condensed administrative costs. A level playing field would be created with a common national market.
It also eases the launch of start-ups and makes business relatively easier. In a long term perspective, this will lead to a rise in the economic growth of the country. Most importantly, it will strengthen relations with multinational companies and aid in increasing Foreign Direct Investment (FDI) and Foreign Institutional Investments (FII). This will further help in faster decision making, which will further strengthen their relationship with the country.
Looking at the current picture of the Indian retail sector, the introduction of GST will act as a benefit at different stages of the value chain. To begin with, the procurement of raw materials and movement of goods would become less cumbersome, which will further open gates for more suppliers or vendors to merge. Following this, a wider base of distributors would be available as state boundary paperwork will not be a hurdle, resulting in better access and low transportation costs.
A favourable environment for a supply chain would reduce transit inventory, further reducing the working capital requirement. Adding to this, simplified taxes and availability of input tax credits can help fetch better margins. GST will also avoid the red tape and documentation on collection and submission of various forms.
Rentals are one of the main costs of retailing industry and they attract service tax at 14.5 percent. Currently, the retailers cannot set off these costs like the other industries. This, they feel is an additional cost of operating in this industry which is unfair to them. Under GST, taxes on services would be available for set off against taxes on goods. Thus, the retailers would be positively impacted.
To conclude, the key benefits of the GST will be the aid where the retailers create supply chain methods based on transportation models rather than taxation models.
To sustain the competitiveness of the Indian T&A industry and help the industry grow and achieve its potential target, it is very important to support this industry by levying a lower rate of GST as currently, fabrics do not attract any tax (both Excise and VAT) and readymade garments attract only VAT.
sanjay-guestauthorABOUT THE AUTHOR: Sanjay Vakharia, COO, Spykar Lifestyles Pvt. Ltd. Vakharia has been a pillar of strength for Spykar Jeans since its inception in 1992. With a strategic bent, he has been instrumental in creating the brand image for Spykar. With an elaborate experience of over two decades and an extensive insight into global trends across markets like the USA and UK, coupled with sharp business acumen, he gave Spykar the required impetus to transform from a laundry grown to a brand that defi nes excellence, aspiration and sustainability. Also, his impeccable understanding of the dynamic and ever-changing youth market of the country has always given the brand the edge over its competitors. The journey of Spykar has seen him understand the product, the audience and how to seamlessly integrate both to give the discerning their due without compromising on the value ecosystem of Spykar.
The views and ideas expressed in this article are his own

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