The roll-out of GST (Goods and Services Tax) and the removal of exemptions and tariff variations will change the market dynamics, feels K. P. Gopal, Director, Stuser Tools, Chennai (http://bit.ly/F4TKPGopal). “It can make some companies more price-competitive than earlier, while it can make others (who enjoyed the benefit of tariff variations) less competitive,” he adds, during the course of a recent interaction with Business Line.
Excerpts from the interview.
What do you see as the top two areas in your industry that will be impacted the most by the proposed GST regime?
The primary area that will be impacted would be the ushering in of the “simplicity” factor. Historically, Indian industry has resigned itself to a highly complicated and cumbersome way of doing business.
This problem is compounded in the case of MSMEs (micro, small, and medium enterprises) since they have to deal with the same plethora of taxes, rates, and agencies like a large industry but with only a fraction of the manpower available at their disposal. If GST is implemented in its true spirit, simplicity and transparency are what most companies are looking forward to.
The second important area is that GST would create a level-playing field for companies where success would be determined by efficiency and not by artificial factors such as tax rates offered by different states.
Kindly specify one key issue on which policy clarity required, as regards GST.
One key issue would be whether GST will be administered by a single agency or if there will be a central and state level agency administering it.
The standoff between the centre and the states has made the possibility of a two-agency solution very likely. This can be a major disappointment since it will be against the very fabric of an efficient GST and will only end up as a modified version of the current system.
It would be better if in the ongoing dialogue between the centre and the states, the basic principles of GST are not forgotten – One tax at one rate for goods and services across all states, managed by a single agency. So long as this final objective is not diluted and there is a roadmap to achieve it, it is better for the country as a whole.
Your take on one priority that merits attention in enterprises, ahead of the GST roll-out.
For most companies the focus in the run-up to GST has been the law itself and compliance issues. However, the issue they need to focus on with equal if not more importance is the business angle and the impact on it.
Every enterprise would do well to be prepared in factoring this impact on both their purchases as well as on their final product pricing. To facilitate full understanding of this impact and enable readiness for the same, it would be necessary for the rates of GST to be finalised at the earliest.