After years of being in consultation and preparation mode, GST has finally become a reality. The one nation-one tax regime has, in a stroke, pulled down interstate barriers, resulting in less redundancy bringing more uniformity in the economy. I am sure GST will encourage seamless flow of tax credit from the manufacturer to the retailer, and accelerate employment generation by boosting economic activity. It can push India up in the global rankings of the ease of doing business. The assurance that teething troubles will soon be over is timely, as it will address industry concerns that the transition could disrupt the working capital cycle due to ‘input credit lock-up’ in the initial months.
Impact on the tyre industry
As an integral part of the logistics and transport industry, the tyre manufacturing sector will benefit from GST. Initial challenges aside, the new regime brings good news for the tyre industry, as an increased movement of heavy commercial vehicles across states will result in an increased demand for tyres. The elimination of the complex multi-layered indirect taxation system will also simplify processes and bring efficacy in product costs, although it is too early to put a number to that.
The GST regime taxes commercial tyres at 28%, but we are hopeful that the simultaneous abolition of octroi duty—which was a hurdle in timely delivery of goods and smooth movement of vehicles—will make a difference. A uniform tax structure will help in evasion of unfair trade practices, eliminating under-invoicing and falsification of costs. The tyre industry is ready and has prepared itself extensively across its large network of dealers, suppliers and natural rubber growers through a series of GST-related outreach workshops on understanding and implementing new compliances under the GST regime.
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Likewise, JK Tyre has undertaken extensive orientation and training programmes for our own, as well as all stakeholders to make ourselves GST-compliant, so as to undergo this transformation with least pain.
With a concerted effort between the industry and the government, I am sure adapting to the new system will not be all that difficult.
The author is vice-president, JK Organisation, and chairman & managing director, JK Tyre & Industries.
Views are personal