Page 11 - Banking Finance August 2017

GST UPDATE

GST poses to be revenue neutral in short term
60% of traders are com-
A report by Fitch Ratings emphasize on the fact that GST will support productiv-
ity and boost the long-term growth prospects but is un- puter illiterate
likely to increase tax revenue in the short-term. "GST According to the Confederation of All
will unify the indirect tax system and remove domestic Indian Traders
barriers to trade, which should support productivity gains (CAIT), a
and GDP growth over the long term," Fitch said, adding large num-
it is "unlikely to increase revenue in the short term." bers of trad-
ers are still
Very low impact on realty sector unaware about the fundamentals and

As GST is a consumption based tax, the real estate deal- compliance of the tax.
ers shall pass on the tax benefits to end consumers and The confederation released a white
therefore, marginally impacting the property prices. It paper; to disseminate information on
is expected to see a correction of upto 3% or inch up a GST said fulfilling digital compliance
bit from current levels. However, prices of ready-to- would be big as 60 % traders in India
move-in apartments with completion certificates will have no access to computers. The
remain steady as these properties are out of the GST ambit. traders' body has, therefore, urged
the government to open GST facilita-
Price burden on small businesses and informal workers tion centres in the offices of trade as-

"Even insurance premium is not spared from high taxation. Normal activities in sociations.
many of these sectors have been affected CIAT also sought an interim period of
and/ or collapsed, leading to massive job nine months to be provided during
losses," the Centre of Indian Trade Unions which no penal action may be taken
(CITU) said in a resolution adopted by it at its against any trader for procedural
central meeting held in Shimla. lapses.
The union reiterated that GST has adverse im-
pact on the unorganized sector workers and those engaged in small and decentralised MRP stickers to be re-
manufacturing such as tailoring, garments, textile, beedi, small drug manufactur- printed
ing, construction, matches & fireworks and passenger & goods transport.
The suppliers have to reprint MRP
Goods imported by SEZ developers, units exempted stickers to
cover GST
from GST rates or
The Finance Ministry has exempted the goods and services imported by a unit legal con-
or a developer of a special economic zone (SEZ) from levy of integrated goods s e -
and services tax (iGST). Pratik Jain, Partner and Leader-Indirect Tax, PwC India, quences will be attracted. Food and
said that supplies to SEZs are zero rated and any imports of goods into SEZs are consumer affairs minister Ram Vilas
not taxable. This latest exemption from GST brings the same position that ex- Paswan said the government has
isted pre-GST as well, Jain told BusinessLine. given 3 months time till September
to reprint the revised maximum re-
"This exemption was expected. The basic idea is supplies to SEZ must not at-
tract GST, whether it is domestic supplies or from abroad," he said. R tail price (MRP) with the implemen-
tation of the landmark GST. "Fall in
Muralidharan, Senior Director (indirect taxes), Deloitte in India said that the
prices due to lower GST should be
upfront exemption from GST to goods procured by SEZ units will help reduce the
passed on to consumers. ...The gov-
working capital requirements of these units. Abhishek Jain, Tax Partner, EY, said
that continuation of upfront exemption of GST for procurement of both goods ernment will take legal action against
vendors not declaring revised MRP
and services by SEZs will benefit them and prevents any unwarranted blockage
of working capital. after GST," he said.

BANKING FINANCE | AUGUST | 2017 | 11

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