Market Overview India: Goods and Services Tax for one market
Goods and Services Tax (GST) is one indirect tax for the whole nation, which will make India one unified common market. The Indian Government claims it to be the biggest tax reform since independence.
“India will move in a new direction with GST implementation,” stated the Indian Prime Minister, Narendra Modi at the midnight of June 30, 2017. The Goods and Services Tax was launched with great pomp in the Indian Parliament. GST is one indirect tax for the whole nation, which will make India one unified common market.
What is Goods and Services Tax?
It is a single tax on the supply of goods and services, right from the manufacturer to the consumer. This means that there will be a reduction in the multiplicity of taxes and there will be uniformity of laws, procedures and tax rates across the country. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
Benefits of Goods and Services Tax
The new tax reform is expected to boost investments and exports, thus syncs with the government’s vision of making India a manufacturing hub under the ‘Make in India’ campaign. This will help goods and services produced in India competitive in the national as well as international market.
According to the Central Board of Excise and Customs, exports will be zero-rated in entirety unlike the present system where refund of some taxes may not take place due to fragmented nature of indirect taxes between the Centre and the States. This will boost Indian exports in the international market thus improving the balance of payments position. Exporters with clean track record will be rewarded by getting immediate refund of 90% of their claims arising on account of exports, within seven days.
Views of industry players
“With the implementation of GST India has shown that it can drive economic transformation in a structured way.” – Daniel Sims, Managing Director, Carl Zeiss India
“With GST coming in, we will actually improve our service levels and serve customers faster and better.” – Ganga Nandan Mishra, Vice President – Automotive Business (OE Sales), SKF India
“The industry is happy with GST. This is a game changing tax reform as it will not only send out good signals but is a step in the right direction which will have a positive effect.” – Rajesh Khatri, Executive Director and CEO, TAL Manufacturing Solutions Ltd
“The implementation of GST will make businesses grow faster and better. It will make our customers work more efficiently and also open up new avenues that will enable us to introduce latest technologies in India.” – Balwant Singh Bains, Head – Product Management & Marketing, Zavenir Daubert India
“GST will bring down the manufacturing cost and as it is a long term strategy the positive impact shall be only seen in the long run.” – Vijay Zaritaklikar, National Sales Manager, UCAM Pvt Ltd
GST is likely to improve India’s ranking in the Ease of Doing Business Index and is estimated to increase the GDP growth by 1.5 to 2% and thereby generate more employment.