New Delhi, Aug 16 (IANS) A majority of businesses want a single rate of goods and service tax (GST), both at the state and federal level, and expect the tax reform to have a positive impact on profitability, according to a survey released Monday.
‘Eighty eight percent of the respondents prefer having a single national GST enactment, both for centre and the states,’ said the joint survey by the Confederation of Indian Industry (CII) and global tax advisory firm KPMG.
‘This view may be justified as most the respondents had presence on a pan India basis and they expect GST to be a unifying fiscal legislation across the national market,’ it added.
The proposed GST is said to change the very manner in which indirect taxes are levied and distributed among various states.
About 84 percent of the respondents said implementation of GST would have an over all positive impact on the profitability, and a majority wanted the new structure to come into effect from April 1, 2011.
‘The proposed reform in the indirect taxation system through the GST regime would remove tax distortions and enable creation of an efficient and harmonised consumption tax system,’ said T. Kannan, managing director, Thiagarajar Mills and chairman CII trade sub-committee.
One of the key feature of the GST would be seamless flow of input tax credit for business. The new scheme is said to ensure no or very limited cascading of taxes.
According to the survey, 44 percent of the respondents considered GST as an opportunity to consolidate their business operation.
‘The response to the survey reaffirms that industry has high expectations from the government on implementation of GST and it is a clear message to the lawmakers to take up introduction of the GST regime seriously as one nation, rising above petty differences,’ said Sachin Menon, executive director, KPMG.
Forty six percent of the surveyed felt nervous about the possibility of working capital getting blocked.
‘Taxation of stock transfer is in effect only a prepayment of tax on output which will primarily impact the working capital requirements,’ the report said.
About 55 percent of the respondents said they are yet to assess the impact of GST on their pricing formulae as there was still no clarity on the operational impact and finality of the tax structure.
The respondents also said they may consider consolidating their operations including manufacturing locations, warehouses, contract manufacturing after the introduction of GST.
Sixty eight percent felt they would require at least 3-4 months for reconfiguring their IT systems to attune their business to the new tax regime
