GST Launch : Reaction on GST

Sachin Menon – Partner and Head, Indirect Tax at KPMG in India

“As the nation celebrate the birth of a historic GST at midnight today, which is expected to change the course of economic development of the nation, I hope all of us appreciate that like every new born, GST also have to go through the teething troubles”

“India’s GST is the example of co-operative federalism at its best. The way Arun Jaitley and the state finance ministers conducted the process to usher in this mother of all reforms since independence, is remarkable ”

“With 80% of the goods  falling under 12 and 18% bracket leading  to fall in prices , the GST will enhance the buying power of the consumers without real increase in their income  which will in turn spur demand”

“It will be interesting to know that annual indirect tax budget will no longer be central finance ministry show, as going forward the central GST budget needs the approval of GST council. ”

Mr. Vidip Jatia, Director, Belmac

“Good and Simple Tax is going to be a revolution for the Indian Economy. Areas where double taxation used to be levied are gone. There is still clarity required for various industries due to the complexity of operations however holistically the economy is set for a much more clear tax regime which will have compounding impact on the future growth of the country.”

Mr. Ravindra P. Marathe, Bank of Maharashtra’s CEO and MD 

“In case of the banking industry, while service tax was applicable on almost all services offered by banks, now it is going to be absorbed in the GST. Due to increased rate of tax on banking services from 15% to 18%, GST will result in increased cost of services offered to customers. Under the GST regime, the services received from unregistered vendors/suppliers will be charged GST on reverse charge mechanisms, which will result into higher expenditure. However GST has a mechanism of reconciliation of output services and input services, and banks may get the credit of each eligible input service. Overall, the monetary impact may be negative initially, but the cent percent transparency in transactions will show positive results for banks and the economy in long term.”

Mr. Shaliesh Puranik, MD, Puranik Builders

“With Goods and Service Tax (GST) being implemented from 1st July and Real Estate Development and Regulation Act (RERA) already being in force, the Real Estate sector is experiencing enormous change.  On projects that have not received completion certificate from competent authorities, the tax rate for real estate sector under GST is now being raised from 12% to 18%.  The increase in rate will increase the cost to end user by 5% to 6%.  Apart from GST, the addition of Stamp Duty will increase the overall cost in many states. 

But GST would definitely help in bringing down the construction costs due to lower tax on input items like cement and steel coupled with tax credits at various stages of construction will ultimately benefit both the developers and the buyers. Additionally the evolving market dynamics have compelled the developers to change their approach focusing on customer and delivery. GST will help in venturing India’s goal by empowering more transparency and simplicity of operation in all property deals.”