Here is what some of the business tycoons in the country think about the GST bill.
As the Goods and Service Tax bill clears its way with a thumping majority in the Rajya Sabha, the Indian Inc. has responded positively on the move where several corporate heads said the bills passage would ‘ease’ doing business in the country.
Finance Minister Arun Jaitley on Wednesday moved that the GST Bill – The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 be discussed and passed in Rajya Sabha. The discussion on the GST bill came after months of discussions between the ruling party and the opposition – with both sides meeting multiple times to negotiate amendments.
Here is what some of the business tycoons in the country think about the GST bill:
Bhaskar Pramanik, Chairman, Microsoft India
“I am pleased that the Goods and Services Tax (GST) Bill was passed in the Rajya Sabha today. It is a positive development and I hope the Government will implement this long pending reform by April 1, 2017. The Government’s idea of a single tax regime is crucial to improve ease of doing business in India and address the ambiguities of the current indirect tax landscape, proving beneficial for the economy, at large.”
Narendra Bansal, Chairman & Managing Director of Intex Technologies (India) Ltd
“Finally India gets united, which was living in a legacy of almost 30 different markets within the country. We were saddled with a plethora of diverse state-level taxes and levies of around 25-30% – or even higher in the case of some sectors. GST will ensure India finally emerges as one common market with an approximate tax rate of around 18%, with no double taxation and no cascading effect of multiple levies.
Being a manufacturing entity, Intex Technologies stands to benefit from a uniform tax regime because this will boost operational efficiencies, increase cost savings and make products more competitive. This will help in a major way to simplify the way we do business and will boost government initiatives on “ease of doing business in India”. The world will now recognise India’s potential and the government’s willingness to take bold steps to boost the economy.
As 1.3 billion consumers across India benefit from lower prices, GST will spur higher consumption and increase the tax base through better compliance with the held of information technology enablement. In the long run, these factors will raise India’s GDP growth by 1 or 2 points, generating millions of new jobs and driving greater prosperity.
I wish all the success to the Indian government for the biggest reform after Independence.”
Rajan S Mathews, Director General, COAI
“The passing of the GST Bill is a major turning point in India’s history driven by the visionary leadership of Prime Minister Mr. Narendra Modi and Finance Minister Mr. Arun Jaitley, to support the growth of businesses in the country. The industry welcomes and celebrates this iconic reform, while urging the government to ensure that the rate applied for the telecom services should be no more than the existing 15% to meet the government’s vision of a connected digital India and ensuring affordable services. This paradigm shift in India’s indirect tax regime must play an enabling role in the growth of key sectors like telecommunications. There are certain aspects relevant for the telecom sector that would need to be considered by the policy makers while finalising the GST legislation. We look forward to our continued engagement with the committee and working with them to make the implementation seamless, transformation meaningful and optimal.”
Ashish Goel, CEO and Co-founder at Urban Ladder
“Introduction of GST will be a huge step by the government in backing it’s promise of ease of doing business. As a consumer e-commerce brand, our focus is on building a seamless supply chain and logistics network that helps us fulfil customer orders in different parts of the country. GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country. Additionally, it will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs. Overall, GST is going to be a game changer for most industries and especially for e-commerce.”
Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP
“Further to discussion with various stake holders, the Government has recently circulated official amendments to the GST Bill. The key amendments include dropping of 1 per cent additional tax which was earlier proposed to be applied on the inter-state supplies. The additional tax would have distorted the GST design and led to cascading of taxes, there by negating the potential benefits of the GST structure. Elimination of this tax would enable businesses to structure their operations based on commercial imperatives rather than being guided by the tax environment. The proposed amendments suggest that the Parliament would now be necessarily required to legislate on providing compensation to the States for any loss of revenues, thereby, giving the compensation mechanism a statutory backing. It has also been made obligatory for the GST council to develop a mechanism for addressing disputes between various Governments arising out of the recommendations of the GST council. The proposed amendments are likely to make the GST design and policy mechanism robust and efficient.”
Adi Godrej, Chairman of Godrej Group
In an interview to CNBC, Godrej said:
“The GST will be an extremely good economic development for the country. It has been grossly under estimated in the country. So, first of all, it will add 1.50 to 2 percentage points to the gross domestic product (GDP) growth of the country. It will start almost immediately from the April 1st, higher growth rate for the country. The reason being indirect tax evasion will almost come to an end because under the GST regime, it is not possible to evade taxes and get away with it. The other very important factor to my mind is a lot of direct tax evasion in our country is because of indirect tax evasion. Once indirect tax evasion comes to a very low level, direct tax evasion will also come along. Government revenues could rise and in the long-term government could reduce the rates of the GST quite considerably. However, immediately there will be a relief of around 5 percentage points on taxation on FMCG. It will be similar on almost all goods that go directly to consumers. So, there will be a tremendous benefit. Consumption will go up, production will go up, investment into production will go up, so this is a great development. To my mind it is the biggest economic reform after the liberalisation of 1991.”
Naushad Forbes, CII president
“While government has left no stone unturned to seek a consensus, the willingness and maturity of the key opposition party in terms of understanding the issues and straightening out the differences is indeed praiseworthy. Industry can now think of ‘One India’, which was truly pursued by all political parties in true letter and spirit, and hopefully the Bill will see the light of the day tomorrow.”
“From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25 to 30 per cent. Introduction of GST would make Indian products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth.”
Mr. Rana Kapoor, MD & CEO, YES BANK and Chairman, YES Institute
“The Government has taken a giant economic leap by passing the GST Bill. In one bold move, this will unify India’s tax architecture, make manufacturing efficient, and boost Ease of Doing Business, thus ushering a virtuous growth cycle in India for several decades up to 2050. Implementation of GST in one sweep will lead to efficient allocation of resources, smoothen supply disruptions, harness inflation, aid tax buoyancy and improve compliance, thereby reinforcing conviction in ‘Believe in India’.”
Bharat Goenka, Co-Founder and MD, Tally Solutions
“GST has all the ingredients to be Great. One of the greatest benefits of GST is that it is built ground up as a technology-enabled-tax-system which allows for extraordinary traceability. Being technology led, it has the potential to spiral upwards the trust deficit, rather than spiral downwards. However, one of the major drawback or the most critical cause of potential failure of GST will be in the transference of responsibility of tax compliance and remittance to the customers to make them eligible for input credit. This would create trust deficit in businesses, extended credit cycles choking working capital, and increase complexities in the businesses.
The reasoning of the Government is: people are today colluding (albeit in small percentages) to fraudulently take input credit when it is not due. Therefore, it is only fair to put this risk back on the citizen. It also reasons that because this is a small percentage, which will keep declining due to self-correction by citizens, it is not a ‘great burden’ – that is, the ‘business risk’ is small enough to be manageable. With the framing of this law, the Government hopes that the market will self-weed out the bad eggs. While in theory this is fine, not understanding the cascading consequences of doing this in practice ,and the mayhem it will create is an alarming concern.
With the near ubiquity of Aadhaar, and the passage of the Aadhaar Bill, the Government must mandate that all GST registrations are traceable to individuals based on their Aadhaar identity. Now, the ability to repeatedly create phantom organizations which allow credit to be taken without correspondent payment will rapidly evaporate. And, of course, the sheer traceability of the individuals, and strong public actions showcased for deterrence, will now become effective.”