debasish acharya,op
Bhubaneswar, June 30: Industrial bodies and representatives from the state have joined their counterparts across the country in welcoming Goods and Services Tax regime, albeit with apprehension and reservations.
Ritesh Agarwal, the young founder and CEO of OYO Rooms, believes the implementation of GST would face teething troubles and is glad that the government has given businesses some leeway in filing returns during the first two months.
“This is a practical solution permitting flexibility in the early period as all stakeholders come to grips with the nationwide tax system. . . Over time, there will be more clarity and familiarity, which will enable all stakeholders to adjust, adapt and adhere to GST,” he said.
Ritesh expects GST to boost revenue in the travel and tourism sector over the years. “The industry is expected to contribute $280 billion to the GDP by 2026 and will pass the benefits of uniform taxation on to travelers,” he said.
J K Mohanty, the president of Hotels and Restaurants Association of Orissa, has also welcomed GST but was quick to add that it would have been better had the GST for hotels under the rental bracket Rs2,500 to Rs7,500 been fixed at 12 per cent instead of 18 per cent.
“The government should have considered incentivizing hotels and restaurants that get good assessee ratings. As we will not get any input tax credit, the customer has to bear it. The cost of compliance to migrate to the new portal has increased and the government should, therefore, have incentives for us to reduce the cost. However, despite its shortcomings, we are ready to welcome GST,” he said.
Sudesh Poddar, the president of Hotels and Restaurants Association of Eastern India, pointed out the difficulties businesses will have to face in becoming technologically adept and the cost for complying with the system.
“It will definitely be a hurdle for budget hotels and they may look to recover the additional cost of technology and new systems from their customers, which might , in some instances , lead to higher tariffs,” he said. “The biggest hurdle, though, is the lack of parity of GST rates with Asian counterparts,” he added.
Asian countries such as Japan and Singapore have very low tax rates for their hospitality sector (8 per cent and 7 per cent respectively) which raises their tourism potential. “Ideally GST rate cap below 10 per cent would have helped India attract more tourists and allowed Indian businesses to compete with global chains. Keeping hotels with room tariff below Rs1,000 out of the GST ambit is certainly a judicious move,” he said.
Kamal Nandi, the Business Head and Executive Vice President of Godrej Appliances, in turn opined that lower tax on appliances would have made them more affordable to users. “With 28 per cent GST, we expect the consumer price of home appliances to rise marginally by 1-2 per cent post GST implementation. This could affect demand in the short run. But normal monsoon, boosting agricultural economy and hike in allowances to government employees will propel demand,” he said.
Representatives of brokerage firms also foresee huge positives from GST. Karthik Rangppa, VP Education Services, Zerodha, believes trading and investments won’t be greatly affected by the rollout of GST. “The service tax charged on ‘brokerage and transaction charges’ will increase from current 15 per cent to 18 per cent. [But it will not] really burden our customers. The initial few months can be chaotic with clarity needed on many fronts. But in the long run GST is the way forward,” he said.
With key raw materials such as coal and iron ore pegged at 5 per cent, the lowest GST slab, steel companies are also expecting lower input costs. “Together with a substantial reduction in transportation cost due to unified and standard tax rate under GST, it is likely to help the steel industry reeling under large debt.
“Moreover, under GST, a unified and standard rate of tax will reduce this cost and the delay in movement of vehicles past state check posts, reducing overall logistics and associated costs. GST should bring seamless credit of all taxes, efficiency and equitable platform which would have a positive impact on the steel industry,” Manish Kharbanda, the executive director of JSPL, said.
The small industries sector, however, is apprehensive of the new tax regime. Orissa Small Scale Industries Association president Deepak Kajaria said micro small and medium enterprises are not prepared to handle the complexities of the new law owing to inadequate facilities at their doorstep.
“One nation one tax is a bold step, but breaking one tax into three babies to satisfy the federal structure could have been avoided to give a meaningful impact to a simplified way of putting things together, making the compliance part easier,” he said.
