How is GST a significant milestone for Indian economy?
GST or The Goods & Services Tax is one of the most critical tax reforms launched throughout India recently and will go a long way in streamlining the tax system, and providing a much needed stimulant for economic growth and progress. Not only will the implementation of a unified tax system simplify the tax policy and structure but it will boost the economy in the long run by easing the indirect tax burden for the end consumer. GST will lead to a redistribution of the tax burden between manufacturing and services thus leading to a reduction in transit inventory, better FDI prospects, operational efficiency, and reduction in logistics costs, minimizing exemptions and also deter tax evasion. The implementation of a comprehensive GST will lead to efficient allocation of resources across categories and provide an impetus to economic growth.
Has your organisation implemented GST within the organisation? What were the operational challenges in implementing GST within the organisation?
The process has already started and our teams are working towards implementing it smoothly with vendors and clients. IT sector is not as affected as manufacturing or e-Commerce. The larger chunk of our revenue is generated from outside India, and thus exempted from GST.
How has GST implementation helped you in terms of ease of doing business?
It is too early to comment on the actual benefits as the policy has just come into effect and we are still in the process of implementation. Though I believe the government’s aim is to ensure ease of doing business and they will engage meaningfully with every industry to ensure that the implementation is successful and achieves the desired purpose.
How will digital transactions through GST help in increase in business for the company?
Digital Transactions through GST will bring in the desired accountability and regulation into the various sectors and will give the much-desired push towards a digitized economy, reduction in inflation, enhance export competitiveness and economic growth. Businesses have to file their returns electronically and made digitized payment for any transactions above Rs. 10,000. This will help government to tap the informal businesses which are quite large but have defied the tax payment in the past. Further as the transaction will be captured digitally, it would be difficult to evade tax by showing losses or understating their sales. Not sure if it would lead to real growth in businesses but will show increase in business on records and will definitely increase government’s tax collections.
How will GST support “Make in India” initiative in the long run?
GST is very much aligned to make the flagship project of the government a success. The ultimate aim is to boost the manufacturing sector in the country by attracting foreign investment. Tax system was quite complicated for the manufacturing industry with multiple indirect taxes, including the cost of transportation, warehousing. This ultimately increases the cost of final product, thus leaving it unattractive for domestic and international market. An uncertain tax system was also a big deterrent for foreign investments. GST will reduce the cost of manufacturing and with a single tax structure the government is aiming for more transparency and ease of business for the manufacturers.
What are the future challenges with respect to GST, which needs to be implemented as per government regulation?
One of the major challenges currently faced in the implementation of GST is the bringing of all the different taxes across states under one roof. This will take considerable time and effort to streamline. So the best way to move ahead would be to implement the basic structure and keep working and improving it along the way.
Mr. Aloke Ghosh
CFO (Chief Financial Officer), Infogain
News Originally Posted on: VAR India