GST: Here's what experts have to say about the transition to new tax regime

After the country's largest tax reform, the goods and services tax (GST) came into force on 1 July, several industry experts feel road may not be smooth for several sectors in the course of transition to the new tax regime in the near term.

Experts weigh in with their views

Surendra Hiranandani, Chairman & MD, House of Hiranandani
While the intent is to streamline the tax administration and bring more businesses in the tax net, it is unlikely that GST will have any impact on property prices. We feel that the current rate of 12 percent on under construction projects might marginally bring down prices in the affordable segment owing to the input tax credits, but it is unlikely that similar impact will be felt in the mid-priced or premium housing projects.

Rahul Shah, CEO, Sumer Group

The value of the property is expected to get cheaper due to the abolishment of VAT, Service Tax and other additional indirect taxes. Presently taxes which are borne by the builders during the procurement of land are added to the cost of an apartment, increasing the burden on the buyer. Because of GST these taxes will not be added to the cost and property prices will reduce eventually.

Roshini Sanah Jaiswal, CRO & Promoter, Jagatjit Industries Limited.

The introduction of GST will affect the company negatively in the short term as it won't get input credit and the cost is expected to go up by 7-9 percent. However, hopefully the impact will be mitigated over the next couple of months as the industry is expecting a price rise.

Praveen Nair, General Manager, Datacenter Dynamics

From an IT infrastructure perspective, just as demonetisation caused a massive increase in digital transactions, the GST rollout will see billions of digital invoices in a day. This will in turn increase the demand for compute and storage and therefore pressure a market that is anyways going through capacity shortage. In short, it's a great time to be in the data centre business.

Shantanu Jha, CEO, Zooty - beauty app

Representational image. Reuters

Representational image. Reuters

The government must extend the hand of support and compassion towards smaller traders and businessman in the first few months of the implementation of this historic tax reform.

Ashishkumar Chauhan, MD & CEO, BSE

GST is expected to improve ease of doing business and to be much easier for tax payers as compared to current multiple tax systems encompassing state, centre and city-based taxes.

Prashant Modi, MD and CEO, Great Eastern Energy Corporation
We hope the government brings natural gas under GST at 5 percent at the earliest in order to enhance domestic exploration & production of natural gas. This would increase energy security and help in reducing our dependency on imports.

Gautam Khattar, Partner - Indirect Tax, PwC

The local state VAT which leads to variations in prices across State will no longer be there and may provide single price across India. However, the existing leases will be impacted upto 30 percent. New lease will reap the benefit of additional credit available under GST.

Rahul Garg, Founder & CEO - Moglix, a B2B marketplace

Many sectors are still trying to understand how technology and right partnership can help them with compliance. Some disruption is expected initially.

Kiran Deshpande, Co-Founder, Mojo Networks & President - TiE Pune

GST planners have unenviable task with massive push and pulls from diverse constituencies on the tax rate. However, software technology is a core to India as daal roti and sambhar rice, and thus deserves commensurate tax slab if not a complete tax exemption. It will hugely help Make In India, India Stack usage and definitely a large number of start-ups.

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

A 4 percent – 6 percent increase in taxes will directly impact business growth and 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 6 percent for various categories like pickles and pastes.

Yogesh Bellani, CEO, FieldFresh Foods Pvt. Ltd.

The rates for most of the fast-moving consumer goods have been kept on the expected lines keeping in mind their mass consumption pattern. Packaged juices, ketchup and sauces will fall under the tax slab of 12 percent, whereas products like pastas and noodles, mayonnaise, salad dressings and mixed condiments will come under the 18 percent slab. There might be some initial teething issues with the implementation of GST, however, the impact of the same on the FMCG sector will be largely positive for the time to come.

Nishanth Chandran, CEO, TenderCuts - a meat procurement omni-channel platform

GST is a boon for companies who are both in the procurement of product and consumption of services. This will help us offset and reconcile taxes, which was not possible earlier

Arun Kumar, Chairman and CEO at KPMG in India

The focus should now be on making the transition seamless and effective. Making compliance cost-effective, particularly for smaller businesses, is extremely important. The potential benefits of this landmark-reform will become real when the benefits of rationalised taxation accrue to consumers and business benefits from cost-efficiencies in logistics and streamlined processes.

Ansh Bhargava, Head - Growth & Alliance, Taxmann.com

Tax compliance will lead to higher revenue for both the central and state governments and enable them to fulfil their social objectives.

Shirish Deshpande, President, Indian Association of Amusement Parks and Industries (IAAPI) & CEO, Pan India Paryatan Pvt. Ltd., (PIPPL)

A 28 percent GST on amusement parks is a huge setback for our industry which in essence puts our very survival at risk. Such high taxation is outrightly unsustainable for our industry which as it is operates on a paper-thin margin. Moreover, treating amusement parks at par with gambling and racing industry is really disheartening. Amusement has a direct correlation with the development of tourism in any state and plays a major role in creating employment both directly and through ancillary and other related industries.

Ravindra P Marathe, CEO and MD, Bank of Maharashtra

Due to increased rate of tax on banking services from 15 percent to 18 percent, GST will result in increased cost of services offered to customers. Overall, the monetary impact may be negative initially, but the cent percent transparency in transactions will show positive results for banks and the economy in long term.

Indranil Pan, Chief Economist, IDFC Bank

While it would be hazardous to guesstimate the implication on growth and inflation in the immediate run, the perception is strong for the economy to gain in the longer term as the system stabilises and efficiency gains are evident. The higher tax collections of the government if judiciously earmarked for infrastructure investments is likely to boost to the potential growth of the economy.

Devendra Kumar Vyas, CEO, Srei

Higher rates under GST leads to requirement of higher working capital as at any point of time the input tax might not be fully absorbed against output tax liability. It also results in higher cash flow which consequently increases the credit risk on the underlying transaction. Both of the above factors result in increasing the cost of leasing an equipment. In order to sustain the nascent leasing industry in the infrastructure space, it is desirable that full input tax credit is allowed instead of providing a blanket restrictive clause.

AG Rao, Group Managing Director, ManpowerGroup India
Hiring in many sectors is set to receive a big boost during the GST regime since many unorganized sectors will now be streamlined and therefore there will a need to fill the vacant positions which earlier were being ignored or not counted necessary.

Ritesh Agarwal, Founder & CEO of OYO

Being a large-scale reform, there may be some initial teething issues. Hotels are the single biggest contributor to tourism industry which accounts for 7.5 percent of the GDP. The industry is expected to contribute $ 280 billion to the GDP by 2026 and will pass on benefits of uniform taxation across the country to travellers.

Sumit Sabharwal, Managing Director (India & SAARC), Excelity Global

GST will propel job sector attain an annualized growth rate of 10-13 percent and fuel demand for professionals in various segments of the economy. Sector-wise, the immediate high-impact segments of GST are expected to be automobiles, logistics, home decor, e-commerce, media and entertainment, cement, IT and ITeS, BFSI, consumer durables, pharma and telecom.


Published Date: Jul 12, 2017 11:30 am | Updated Date: Jul 12, 2017 11:30 am


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