GST a gamechanger for Indian economy; will benefit consumer durables industry; here’s how

The implementation of Goods and Services Tax (GST) is a reformative step and will enable ease of doing business in the country.

Written by Guest

July 26, 2017 14:30 IST

GST, new tax regime, new tax rates, multiple tax rates, Goods and Services Tax, GST rates,

Ambiguous rules under the new, multi-rate Goods and Services Tax (GST) tax that went into effect on July 1 have left firms confused on how to price their products.

The implementation of Goods and Services Tax (GST) is a reformative step and will enable ease of doing business in the country. The Government has been watchful with the rates imposed on different product categories. Further, the Council has also provided relief to the industry by raising the input credit tax on goods taxed at 18 per cent or above to 60 per cent for the GST liability against excise duty paid on stocks with traders and retailers. The government has also relaxed the procedure for filing returns for the first two months of GST implementation by taking into account concerns expressed by trade and industry.

The consumer durables industry is expected to benefit immensely from the new tax reform. This industry is a combination of organised and unorganised market participants. Apart from minimising issues arising out of tax compliance and transparency, we see the organised sector deriving huge benefits under the GST.

The provisions under GST (such as lower limit of eligibility for obtaining registration and applicability of reverse charge mechanism) from purchases of unregistered traders will lead to higher registered traders and assist in the industry making a sharp move towards a more organised sector. This will further reduce the discrepancy between organised and unorganised component and lead to growth of the industry as a whole.

The industry might slow down for a brief period as our supply chain will adjust according to the new norms. We, however, expect the business to bounce back within two to three months. The logistics cost is expected to reduce drastically owing to better management of warehousing facility and improvement in transit time for movement of goods. Good monsoon will also help the industry to be back on its feet as consumers would have more disposable income, directly impacting sales of electronic appliances and white goods.

There is no denying that retailers and distributors were feeling vulnerable about this big transition to GST. To help the traders with a clearer understanding of the new tax structure, companies, including Videocon, have conducted multiple GST seminars across the country. Here, many taxation experts were invited to resolve the traders’ queries regarding GST implementation. We also set-up a digital helpline for retailers, GST@vgmail.in, where consumer electronics retailers can email their queries regarding GST.

GST, in my opinion, is a game changer for the Indian economy and brings us at par with the developed nations with the concept of “one nation, one market, one tax.”

(The author of the article is CM Singh, COO, Videocon Industries Ltd.)

This article was first uploaded on July twenty-six, twenty seventeen, at thirty minutes past two in the afternoon.