In an interview with CNBC-TV18, Nrupesh Shah, ED-Corporate Affairs, Symphony said implementation of GST will bridge the price gap between organised and unorganised sectors.
Nrupesh Shah, ED-Corporate Affairs, Symphony believes that the IT backbone to connect the states and lack of trained personnel will be the the two main issues that could delay the roll out of the Goods & Services Tax (GST) Bill by 1 April 2016.
In an interview with CNBC-TV18, Shah said organised sector will benefit as tax evasion by unorganised sector can be controlled via GST.
“There are many industries where there is a substantial market share by unorganized players, the major difference in end prices is on account of evasion of taxes by unorganized sector can be bridged to major extent,” he said.
Shah said 70-80 percent of the volume in the cooling segment comes from unorganised players, which needs to be reduced to give more weightage to organised sector. The sector has grown at a compounded annual rate of 20 percent in last four years. This can further be accelerated with the GST, he said.
On the issue of one percent manufacturing tax, Shah said globally, it is not included in any GST act and will be an additional liability for the companies.
Below is the transcript of Nrupesh Shah’s interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18.
Latha: It looks like the GST may – there is a slim chance that it will make it for that April 2016 deadline though that will only be the amendment and there may be still time before it is introduced but in its current version, what is the sense that you are getting? Will it do you good or will it do you bad?
A: For the organized industry certainly it will be good because multiplicity of the taxes and simplicity will help for sure.
Secondly, there is a cascading effect of the taxes, so that will also help. There are many industries where there is a substantial market share by unorganized players and due to variety of reasons the major difference in the MRP or the end prices is on account of evasion of the taxes by unorganized sector. So, to a major extent that will be bridged.
Latha: If the revenue neutral rate of GST is higher than 20 percent, the select committee apparently has advised that it should be within 20 percent but it is only an advice, it is a recommendation. If it were say 24-25 percent, do you think there will be a greater incentive to escape the tax on the part of the unbranded and unorganized sector in which case life can actually get more difficult for you?
A: Both are different issues, one is the rate of tax and second is the compliance by unorganized sector. Because of GST, many loopholes of the compliances will be really tapped and hence, unorganized sector will find it difficult to evade or avoid. As far as the rate of the taxes are concerned, globally in most of the countries the rate of GST is in the range of 15-20 percentage