Goods and Services tax in India
Growth Stimulus Treatment ( GST )
That our country’s GDP Growth Rate is going to get a bump up if the goods and services tax was to be implemented, is a consensus among many experts, as well as the industry bodies, although they may differ regarding the extent of push GST is likely to give our economy, with the quantum suggested varying from 1 to 3 % of incremental increase in growth. At any rate, (one or three ! ) this can only be good news for the nation, now that the long-awaited tax has been passed by both houses of the parliament, and there is every likelihood of the unified tax regime being introduced from April 2017.
Other than the Goods and Services Tax, there is one another item which has been identified to have a direct and considerable positive bearing on our GDP Growth, and that is improvement in our Infrastructure. It has been said by some people in the know, that upgrade of our infrastructure to a world class level, will boost our GDP growth rates by a significant 2 to 3 %, because this would improve our competitiveness as a nation, and allow us to extend our markets. It is expected that a better infrastructure will be a catalyst for the manufacturing sector in particular. Here also, we seem to have things covered. In case you didn’t notice, India has climbed from an ignoble 71st position to a respectable 16th position, in the World Economic Forum’s Global Competitiveness Index, all in the space of last 2 years, and this impressive upward movement was driven predominantly by our surging scores in the categories of “institutions”, “innovations”, and — yes, you’ve guessed it right — “Infrastructure”! It is a different matter that these scores are not objective or quantified in any manner, but subjective perceptual ratings derived from survey responses by corporate executives, but nevertheless, our infrastructure seems to be in place, or at least, has vastly improved in the last two years, if our corporate consensus has to be believed.
All in all, we seem to be well on our way to notch up much greater GDP growth numbers in the coming years, armed as we are with the twin tools of GST and vastly improved Infrastructure, which together would certainly give us a more competitive set of products and services. However, we still thought it will be worth your while, to discuss in this issue, the possible interplay between GST and Infrastructure, and mainly, the good things that can and will happen in the infra sector due to the imminent introduction of the vaunted goods and services tax. A lot has been said regarding the possible benefits of GST for our manufacturing sectors in general, and to the logistics sector in particular, but then what GST can do for the infra developers and contractors, is perhaps a relatively uncharted territory, thereby deserving deeper exploration. The tangible gains from GST which directly impact the bottom lines of companies are easier to immediately comprehend and compute. But it is the whole lot of intangible positives of GST that is an interesting topic to discuss, debate and get a handle on, particularly when you try to fathom all this in the context of the complex infrastructure sector. There are big and beautiful spin offs expected from GST, like improvements in turnaround times, cycle times, transparency, paperwork, ease of compliances, cash flows, inventories, service levels, etc., etc., and it is likely that the extent of these changes would ultimately surprise even the most optimistic of observers.
And while we expectantly wait for all this to happen, the Goods and Services Tax Network (GSTN ) has issued advertisements in the national media for positions like VP — Customer Services, among others. Definitely, happy days are coming, if erstwhile sales tax/value added tax assesses will be looked upon as customers in the new dispensation of goods and services tax. Going from being persecuted, to being feted, now that’s what we might call a revolution of sorts.