The implementation of Goods & Services Tax (GST) will be a game changer and boost ease of doing business in India.From left to right: Ajit Gundeshah (secretary, KIA), Chetan Oswal (chartered accountant), Ajinkya Jagoge (chartered accountant) and Manish Zanwar, (President, KIA) at Business Standard Smart Business in Kolhapur on July 26, 2015, in association with Kolhapur Investors Association
The implementation of Goods & Services Tax (GST) will be a game changer and boost ease of doing business in India. The proposed levy will replace most central and state levies with one single tax and is projected to add as much as 2 per cent to the country’s gross domestic product (GDP). This was by and large the consensus view that emerged at the Business Standard Smart Business panel discussion on ‘Proposed Goods & Services Tax’ held in association with the Kolhapur Investors Association.
Chartered accountant Chetan Oswal explained how GST will be a new method of taxation, the taxes it will subsume and its shortcomings and benefits. GST is a destination-based tax and will treat the entire country as one market, he said. Its shortcomings include its cascading impact, lack of uniformity in VAT rates and narrow base. However, its benefits comprise reduction in multiplicity of taxes, a simple tax regime and increase in voluntary compliance.
Ajinkya Jagoje, also a chartered accountant, spoke about the impact of monetary policies of world economies on India. He touched upon various issues including the crisis in Europe and Greece, the meltdown in China, the US Fed rate hike, the rise in Australia’s debt, the removal of sanctions on Iran and the increase in oil supply and fall in prices, the fall of gold prices and the US dollar getting stronger.
Against this backdrop, Mr Jagoje said, India is better placed due to prudential forex management. The forex reserves at $360 billion are sufficient to fund imports for 10 months. Inflation has stayed in a tight range especially in the wake of fall in oil prices and reduction in gold imports. Besides, the current government has identified the black economy as a hindrance and enacted The Black Money (Undisclosed Foreign Assets and Income) and Imposition of Tax Act, 2015. Quoting RBI Governor Raghuram Rajan, he said, “India is much better placed to brace for a storm today than it was in the past. However, waters can turn rough and the ship may sway a bit further; but ultimately, it will reach home safe.”