The Goods and Service Tax (GST) bill is passed with all the votes. The bill which will turn India into one common market will also boost the Indian economy. Experts are hoping for greater ease of doing business and big savings in logistics costs across all sectors.
Some companies will gain more as the GST rate will be lower than the current tax rates they pay; others will lose as the rate will be higher than the present effective rate. Overall India welcomed the 122nd Constitutional Amendment Bill, biggest reform after 1991.
While the rate of GST is yet to be decided, industry observers have assumed an 18% rate recommended by a government panel in making their impact calculations. Assocham president Sunil Kanoria said that the GST regime will boost positive sentiment in the country.
There are positive signs that the economy is moving towards an 8% growth trajectory with sectors such as roads, mining and railways picking up, Kanoria said. The Assocham president said it would lead to much better growth in terms of revenue collection.
“The green shoots of economic recovery have started to appear. India is among the fastest growing economies in the world at present. Government's increased budgetary allocation for infrastructure sector is fuelling this growth,” Kanoria added.
Kanoria said passage of the GST Bill will boost positive sentiment and convert India into a single market. "It would be a big boost for India. However, the state assemblies will have to clear it as well. So, it could take some time before GST becomes a reality. I'm not sure whether the government would be able to roll out GST by April, 2017," Kanoria said.
The uniform Goods and Services Tax is going to benefit small and medium enterprises (SME) the most by way of cutting down bureaucracy and the existing layered tax structure, West Bengal Finance Minister Amit Mitra said.
Mitra said SMEs feed large industries and that this is the most labour-intensive sector and, therefore, SMEs should be given simpler passage for doing business. The single tax structure of GST would be ideal platform for them, he said.
Industry body FICCI is also looking forward to GST becoming a reality. "By amalgamating a large number of Central and State taxes into a single tax, it would mitigate cascading or double taxation in a major way and pave the way for a common national market," FICCI said.