Riding GST Bandwagon

As India prepares to embrace GST this July, there are lots of questions which are cropping up and still need to be addressed. Of course, bringing all the taxes under one umbrella is a very difficult task.

Coming to IT products, it is expected that the levy would be in the range of 12-18% and most probably at 18%. The slab of taxation is yet to be finalized.

But what would bring buoyancy for the industry is that there would be no VAT, no octroi, and no LBT, so customers can get goods from anywhere in India at a same price, which also means partners would be allowed to sell their materials all over India at competitive prices.

Infiltration, which was quite normal, would be trimmed down as big partners would be able to sell products out of their territory. For instance, Pune HP VCP could be sold all over Maharashtra and with this, the inventory could be transferred to any other state.

One thing is for sure that GST would set in the much needed organized selling that would come with the ease of doing business.

Importers will also be benefited as they will import goods and sell anywhere in India by maintaining a local office. But at the same time, the GST transition period is going to be tough and most of the business will be disturbed. Stocking of material would come down to zero that will result in most of the shopping sites running out of stocks for maximum products.

Most of the transactions would be through cash to avoid any taxation levy. So, in a nutshell, GST could be a daunting task, but with this a lot of benefits would follow; right now the execution process is something that needs to be watched out.

Analyst Bio

Amit Sharma, Assistant Manager, Industry Intelligence Practice, CMR