Captains of Indian industry across sectors say they are ready for a July 1 roll-out of the “game-changing” goods and services tax (GST).
The GST would help the economy pick up pace, bring down the inflation rate, and boost the fortunes of corporate India, a nationwide poll of top chief executive officers (CEOs) revealed.
A survey of 34 CEOs conducted across India on Saturday, after the GST Council agreed on the rates for various goods and services in Srinagar last week, found that 88 per cent of corporate executives were prepared for a July 1 roll-out.
Ninety-four per cent of the CEOs surveyed said the GST would have a positive impact on the economy and 62 per cent said that the tax would have a positive impact on inflation. The GST rates have exempted several food products from the tax and kept a majority of essential items in the lower tax bracket of 5 per cent.
However, the anti-profiteering clause, which requires firms to pass on the benefit of input credit or tax reduction to the end consumer by a commensurate reduction in prices, is cause for worry in the corner office as 32 per cent of the CEOs said it could lead to harassment by tax officials, and another 21 per cent chose not to respond in ‘yes’ or ‘no’ terms.
CEOs are upbeat on the impact of the GST on their industries and companies. About 65 per cent of them said their industry would benefit from it, and only 26 per cent say it would adversely impact them.
“I have always been and continue to be very optimistic about India's future after the GST roll-out. While demonetisation has helped in checking black money, and ensuring medium- and long-term growth, the GST, which would be implemented from July, would help in achieving positive economic growth in the country,” said Adi Godrej, chairman emeritus, Godrej group, and a vocal supporter of the GST since it was first announced in 2005.
Most companies said they had set up cross-functional core groups with external consultants to get the software in place and train the staff. Industry is likely to undergo a phase of transition in the next two-three months, and then things will return to normal.
Industry says a unified GST is a prerequisite for a modern developed economy. “With India's primacy in the global commercial and economic space, we cannot lag behind. The pain of short-term inflation and adverse tax burden on companies will be eventually compensated by gains from transparency, better tax credit systems, and ease of administration. It is certainly a progressive tax reform and industry is for it,” said Harsh Goenka, chairman of RPG Enterprises.