Industry bodies confident GST will boost growth

New Delhi, Aug. 8 (ANI): With the Central Government likely to table the Goods and Services Tax (GST) Bill in the Lok Sabha for discussions on amendments made by the Rajya Sabah, trade and Industry bodies have exuded confidence that the GST would spur economic growth and make Indian products competitive in the domestic and international markets. The Federation of Indian Chambers of Commerce and Industry (FICCI) said the biggest advantage from the consumer point of view would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25-30 percent. FICCI president Harshvardhan Neotia had on Wednesday said, "GST is one of the most awaited reform measures by the industry. It is heartening to see that there is consensus emerging in passage of crucial GST Bill. It is noteworthy that the Principal opposition party has played a constructive role by articulating some of the concerns which have been noted by the government and would help form base of a robust GST framework for India." "The cooperation extended by opposition to this crucial legislation is the cornerstone of democracy and gives industry a lot of hope on progress of reforms in the country,", added Neotia. ASSOCHAM Secretary General D. S. Rawat said that a large part of India Inc wants to keep the rate low. He said if rate will be higher than 20 percent it will be counterproductive for industry and lead to inflation, especially on the side of services. Mr Rawat underlined that no tax reform can succeed unless adequate revenue generation is assured to both the Centre and states . The Associated Chambers of Commerce and Industry of India said a large section of India Inc would like the standard GST rate to stay well below 20 percent along with services of mass consumption being included in the 'merit' list to ensure that prices of critical services like telecom, banking, healthcare, railways, do not lead to inflation. The ASSOCHAM's internal assessment on the GST roadmap noted that an interaction with a large number of ASSOCHAM constituents felt that the focus should be to get the maximum tax buoyancy through more and more trade and industry channels in the small scale and unorganised sectors joining the mainstream value chain, rather than keeping the standard GST rate high. "No tax reform can succeed unless adequate revenue generation is assured both to the Centre and the states. Likewise, in the case of GST, the Revenue Neutral Rate (RNR) should be worked out, taking into account the tax buoyancy and all out efforts must be made in this direction. With the kind of IT backbone being readied, the taxation stream should be able to detect any single link seeking to break the chain of value. On their parts, the trade and industry would also like to fall in place if seamless input credit is available and adjusted with the net result that the overall tax incidence, especially on goods is brought down," the ASSOCHAM paper said. Besides, doing away of Octroi and Entry tax at the inter-state borders would bring in a huge amount of operational efficiencies that in turn should have a positive implication for the transaction cost. "Our assessment shows that the industry can live with GST benchmark rate of a band of 17-20 per cent. Anything above that will be counterproductive and lead to inflation, especially on the side of services. Besides, the most important stakeholders in the entire process of reforms are the people of India, who should savour the pudding (as its proof) and then will surely support the entire gamut of economic reforms," ASSOCHAM Secretary General D.S. Rawat said. While it is true that the states have concerns over the possible revenue loss, once tax buoyancy takes place due to GDP growth, operational efficiency and more people getting into the mainstream, it is going to be a win-win situation even for the states. "After all, it is only the states which can make India a single and common market. This is why; work needs to be done on a war footing in the next seven months to fix each and every problem that may crop up. As far as possible, no sector of the economy should be made to feel GST as a problem, instead it should be welcomed as a major solution to the complexities in the Indian economy paradigm," the ASSOCHAM said. On its part, the chamber would reach out to its members and be useful link between the industry and the government, both at the Centre and the states, to thrash out any issue that may surface as "we move towards implementation of the most important reform". (ANI)