• News
  • Columns
  • Interviews
  • BW Communities
  • BW TV
  • Subscribe to Print
BW Businessworld

GST Will Make India True Common Economic Market: Industry Stakeholders

The industry, which has been looking forward to the implementation of the single structure indirect tax regime, has welcomed the passage of the Bill

Photo Credit : Shutterstock


Putting an end to the uncertainties on implementation of goods and services tax (GST), one of the most debated policy proposals on a new tax regime in the history of India, the Rajya Sabha has on Wednesday (August 3) approved the crucial 122nd Constitutional Amendment to translate the Bill into a law. Since the Lok Sabha has already passed this important bill, it will now go back to the lower house of the parliament to incorporate the amendments, although it needs to be approved by at least 50 per cent of all the state assemblies.

The Bill had faced key resistance from Congress, the main opposition in the Rajya Sabha. But the party finally supported the passage of the Bill after the government assured that it will keep the tax rates as low as possible.

With the Rajya Sabha nod to the Bill, six key amendments, including the abolition of 1 per cent additional tax were approved and the new tax regime will now integrate all the indirect taxes including central excise duty and state VAT/sales tax into one GST.

The more simplified and standardised tax regime can now help get rid of various anomalies in the existing indirect tax regime, which involves different tax structure and collection methods laid down by different states and the centre.

The industry, which has been looking forward to the implementation of the single structure indirect tax regime, is overwhelmed by the passage of the Bill. Many large industrial and commercial organisations had already made their accounts compatible to GST.

"The passage of the Constitution Amendment Bill by Rajya Sabha is historic and paves the way for early introduction of GST," said Harishanker Subramaniam, National Leader - Indirect Tax, at consultancy firm EY India.

The political maturity demonstrated by both the government and the opposition in forging a consensus for this landmark event is commendable. This indeed will be the most significant tax reform since independence setting the stage for a regime that can ignite the manufacturing landscape to enable Make in India in One India, Subramaniam added.

"Proud moment for all of India, compliment Parliament and the government of India," Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank told

"The implementation of GST is a welcome move for the pharma sector as it addresses two key issues. First being the abolition of 1 per cent additional tax on interstate supplies, thus eliminating the cascading effect on taxes and goods that move across different states," said Suresh Nair, Partner, Indirect Tax, EY India.

"GST will make India a truly common economic market," said Nihal Kothari, executive director, corporate law firm and legal consultant Khaitan & Company.

According to Kothari, the new tax regime will accelerate economic growth, although the impact on each sector will be different. "The real challenge now will be to have rational GST law and rules to ensure that the objective of GST is met. Equally important is that tax rate should be moderate to avoid inflation," says Kothari.

According to EY’s Nair, GST will help industry players, especially manufacturing companies including drug makers, with manufacturing and distribution activities across India. GST also recognises the situation of a possible inverted duty structure, and permits refund of accumulated credit resulting out of the same, effectively increasing the working capital requirements of pharma players.

"The pharma industry would also be looking forward to a beneficial tax treatment for goods manufacture in tax free zones, a simpler valuation mechanism for levy of GST on stock transfer and zero rating on supply of physician samples," Nair added.

Industry lobby Confederation of Indian Industries (CII) welcomed the passing of the Bill

"GST is expected to remove the cascading effects of various multi-level indirect taxes on goods and services and will subsume most of the country's central and state level duties and taxes, thus making the country a national market and contribute significantly to the growth of the economy and bring down the overall cost of goods and services," said Chandrajit Banerjee, director general, CII.

This is indeed the biggest reform in the field of taxes in the country. The sincere determination and the persistent efforts of the government in consensus building and gaining support of almost all political parties in reaching an agreement is indeed commendable, CII said in a Wednesday statement.

"GST will bring in much needed transparency and higher investments in the coming years and we hope that a few percentage points to India’s GDP will be added through higher tax revenue and investments," Banerjee added.

"We congratulate the government and all parties for collaborating together and ensuring passage of the GST Amendment Bill. The industry has been discussing challenges related to multiple registrations in each state and associated complexities that may arise in the GST regime. We are confident that given the Government’s commitment to ease of doing business, we will be able to address the industry concerns in totality," said CP Gurnani, chairman, NASSCOM and CEO and MD of Tech Mahindra.

"The GST regime should adapt to these changes with an eye on the future. However, apprehensions prevail on the administrative requirements that could potentially render internet enabled businesses uncompetitive. We believe this is not the intent of the government and will work closely with revenue officials towards enabling a simple and enabling GST regime for all," said Sanjeev Bikhchandani, chairman, NASSCOM Internet Council and executive vice chairman, Infoedge.

Tags assigned to this article:
goods and services tax gst bill parliament india inc