ET NOW: It’s a mixed verdict from India Inc after the big reset in GST tariffs, almost five months after the ambitious Goods and Services Tax regime was rolled out by the Modi government.
A survey conducted by global consultancy EY for ET NOW finds that several members of India Inc and small and medium enterprises are still not entirely comfortable about the complex and aggressive rate structure of the new law and are yearning for relief on the administrative and operational challenges which have posed hurdles during their transition.
The survey, conducted among CEOs and tax heads of leading private companies, focused on the level of comfort and readiness in India Inc and the areas of concern which need urgent attention.
More than half of the respondents feel ‘partially comfortable’ about their operational readiness, 32% are ‘fairly comfortable’, while 11% are not comfortable currently. The optimism dips on tax rate rationalization measures announced by the GST Council with 38% partially comfortable with the tweaks to the rate structure and interestingly, almost one fourth of the respondents feel the changes have no impact.
Only 26% of the respondents say they are ready in terms of internal IT systems while a healthy 70% are ‘partially ready’. ERP or software readiness tops the list of concerns on the IT front. There is good news on readiness of supply chain involving distributor and retailers with a strong majority of the respondents i.e. 72% ‘fairly comfortable’ and 16% ‘fully ready’.
Post the relaxation in the GST regime, a healthy 56% of the respondents say they will take up to 6 months to stablise operations while 27% say they will take 6-12 months and 16% are ‘already stabilised’. India Inc feels treatment of transitional issues including credits, issuance of clarifications, simplification of compliance, proposed e-way bills, and anti-profiteering norms and are the biggest issues surrounding GST implementation.
Bipin Sapra, Indirect Tax Partner at EY, says, “The GST council has given a positive signal to the industry that it wants to move towards one single rate in the near future and remove the complexities from a rate perspective. The industry is optimistic of further simplification in the law, procedures and compliance.”
Last week, the government took a big step towards easing the pain for all stakeholders as the 23rd GST council meet slashed the number of items in the highest slab of 28% from 227 items to just 50.
The tax rate for all restaurants, barring those in luxury hotels, was trimmed to 5%, without any input tax credit. The government also addressed the compliance burden for businesses by relaxing procedures for filing of returns, along with an increase in the annual turnover threshold for the composition scheme to ?1.5 crore from the recently revised Rs 1 crore.
The milestone GST council meeting drew a response from Prime Minister Narendra Modi who tweeted, “The recommendations made by the GST Council today will further benefit our citizens and add strength to the GST. These recommendations are in spirit of the continuous feedback we are getting from various stakeholders on GST.”