Manufacturers, logistic companies set to gain from GST implementation
November, 11th 2014
The implementation of goods and service tax (GST) in the country is long pending and now the government is moving fast for its implementation across the country. Moving in this direction, Finance Minister Arun Jaitley has proposed to introduce the Constitution Amendment Bill to implement GST in the winter session of Parliament, starting 24th November and ending on 23rd December.
The government has also proposed to discuss the first tranche of compensation to states for their revenue loss from the phasing out of central sales tax (CST). This came on the back drop of states demanding five-year compensation package from the Centre at the time of UPA government in 2011, when it introduced a Constitution Amendment Bill in the Lok Sabha towards the introduction of the GST.
Once implemented, GST will not only replace the sequence of central and state levies such as excise, value-added tax and octroi with a single unified tax and remove double taxation, but will also boost the overall economic growth.
Implementation of GST will lead to lowering of goods prices and tax burden on the consumer. It will also reduce the transit time, thus bringing efficiency into the system and benefit to the manufacturer.
According to a World Bank report, Indian companies are currently incurring 2-3 times higher logistic charges than the international standard due to factors like road blocks, tolls and other stoppages. Since the formation of the new government at the Center, the country has witnessed big reform measures by the government to drive the economy on a sustainable growth path.
Implementation of GST is another step forward, and the government -- along with finance minister Arun Jaitley and top finance ministry officials -- is actively involved in the execution.
They have already discussed in detail the current status of the proposed indirect tax system and expect adequate information technology (IT) network and infrastructure in the country by April 2016, which will make the implementation process easy and smooth across the state.
The direct beneficiaries of GST are manufacturers and logistic companies, including warehouse facilitators. However, the bottom-line is that, how quickly the government is capable of establishing the new indirect tax regime in place and making it functional.