Goods and Services Tax: Much ado about 2016

Finance Minister Arun Jaitley's April 2016 timeline to implement the Goods and Services Tax (GST) seems to have gotten businesses to look forward to a new indirect tax system, but there isn't much for businesses for the whole of the coming year.

GST is being discussed for the past several years, but it is still a work in progress. What also lacks clarity is the way forward for companies, which are likely to benefit from the measure.

While some industry executives understand this will expedite preparations, others feel there is not much to be done with the limited clarity that has been provided in the Budget.

"Corporates can just wait," says Ankur Bisen, Senior Vice President, Retail at Technopak Advisors, indicating that companies can do little to prepare for GST. "Barring some direct consumer interface industries like retail where companies can look at streamlining warehousing and logistics processes for the GST readiness, many companies will look at such changes and investments only post-GST implementation," he says.

Ashvin Vellody,  Partner - Management Consulting, KPMG in India, partly agrees. "…(GST) will help e-commerce companies rationalise supply chains by addressing  the taxation issues," says Vellody.

GST, which will replace all indirect taxes on goods and services by the central and state governments, needs individual states to agree with the implementation, and this has seen a mixed attempt so far.

There has been a constant tussle between the state and the central governments that has deferred its implementation several times.

Krupa Venkatesh, Senior Director, Deloitte in India, says a Constitution Amendment Bill needs to be passed so that both the Centre and all states enact their respective GST laws. "But the most important requirement is a strong and robust IT network that will ensure electronic monitoring of tax payments and enable transfer of tax paid to consuming states," adds Venkatesh.