With India moving towards its biggest tax reform, here’s how various sectors in India have reacted to the implementation of the Goods and Services Tax (GST) and how it will impact business.
Following the implementation of the GST, the hospitality and travel sectors expect teething issues in the first few months but are not unduly worried, expecting support from government.
OYO Rooms CEO Ritesh Agarwal said: “There may be challenges in compliance and implementation but over time, there will be more clarity and familiarity, enabling all stakeholders to adjust, adapt and adhere.”
However, the Federation of Hotel and Restaurant Associations of India vice president, Garish Oberoi, said the 28% GST for hotel rooms with a tariff of ₹7,500 per night and above is very steep. He asked the government to keep that rate only for rooms with tariff of ₹10,000 per night and above. For the travel sector, the GST rate for tour packages has increased marginally from 4.5% to 5%.
The Federation of Indian Export Organisations (FIEO) has approached the government to reduce the restrictions on using duty credit scrips — a pass that allows holders to import goods by not paying a certain amount in import duties. But with the implementation of GST, these scrips can now be utilised only for payment of basic customs duty and not Integrated Goods and Services Tax. Earlier, manufacturing exporters who imported raw material for export purposes were allowed to utilise these scrips for payment of customs, excise duty and service tax.
FIEO Director General Ajay Sahai said exporters were worried as they have to arrange funds for payment of GST, which will be refunded to them upon exports. “This may lead to a blocking of funds for over six months in many cases, thus affecting competitiveness of exports,” Mr. Sahai said.
The steel sector is feeling bullish after the GST rollout. Players in the sector said that with GST, unorganised players will have to move to the organised form of doing business. Steel Users Federation of India has said GST has abolished the special additional duty on imported goods which was a very cumbersome procedure.
Indian Stainless Steel Development Association president K.K. Pahuja said GST will give the unorganised sector no other choice but to be tech-compliant. “People evading taxes would not be able to survive any longer.”
The cotton textile industry is also feeling positive. Southern India Mills Association chairman M. Senthil Kumar has welcomed the move to bring the entire cotton textile value chain at the lowest slab rate of 5% GST.