Unable to live up to its set deadline of April 1, India might in all probabilities see the rollout of the Goods and Service Tax (GST) from July 1, this year. This will bring along the advantage of having a single-tax regime. What´s more, it is expected to bring down the overall production cost significantly.
´This will be a good step for the industrial equipment industry,´ says Anand Sundaresan, President, ICEMA and Vice Chairman and Managing Director, Schwing Stetter India. Speaking on the benefits for the end-user, he says, ´Equipment will be available at a more reasonable price than before, boosting overall sales volumes for manufacturers.´
He adds that most equipment players, while engaged in domestic trade, do not benefit from VAT. Also, on selling the equipment, across state borders, the manufacturer is obliged to collect the C-Form from the buyer and submit it to the government. Failure to collect this leads to loss of capital and the manufacturer pays the differential taxes. With GST, these obligations shall cease to exist, bringing more efficiency in operations.
These issues apply not just to the big players but to the small-scale industry as well. GST will eradicate sourcing of material from unregistered dealers (those not registered for Central Sales Tax). Once rolled out, the cost of production will reduce drastically. So, it´s a win-win situation for the seller and the end-user.
ICEMA suggests a GST tax bracket at the lower-end, which at present is indicated to be anywhere between 12 to 18 per cent. And construction equipment in many states, such as Gujarat, Tamil Nadu and Karnataka, has sales tax and excise duty at a 5 per cent level. ´Hence, we are asking the government to set the GST cap at 12 per cent,-ö says Sundaresan.
While he expects that the refund of GST on materials returned after GST implementation will be appropriately addressed, he feels that more clarity is required on the fate of VAT and MODVAT credits available in the books on the date of migration.
- SHRIYAL SETHUMADHAVAN