1 yr of GST: Crawling, toddling, and on its feet

AHMEDABAD: As the landmark tax reform — Goods and Services Tax (GST) — completes three hundred and sixty five days on June 30, the adventure remained a fairly difficult for each the trade and the governments. Although the new tax regime has stabilized after preliminary transitional pains, positive issues are yet to be resolved. The advent of a unified market via GST would definitely lend a hand reinforce the ease of doing trade. Delays in the processing of refunds of integrated GST (IGST) and input tax credit (ITC) hit working capital and cost cycles of several businesses, till recently resolved by the government government. The teething troubles could have been addressed but a lot more needs to be performed. Here’s an summary:
Pharmaceuticals

The pharma trade has registered per 30 days double-digit enlargement, which had tanked to unfavorable 2.6% in July when the new tax regime came into pressure. Fresh investments have began flowing into Gujarat. “Before GST implementation, the tax regime was once skewed because of which production industries ended up putting in place a facility in tax haven states. However, GST has performed an equalizer with several corporations making investments in Gujarat after July 1,” said Viranchi Shah, president, Gujarat chapter of Indian Drug Manufacturers’ Association (IDMA). The trade gamers, on the other hand, say positive procedures have now not been laid out to allow manufacturers to claim input tax credit on capital items.

Textiles

Being a highly labour-intensive trade comprising large selection of small and medium devices, textile trade continues to reel beneath the new tax regime. “Smaller devices faced issues with compliance, many of which nonetheless proceed. Exports are flat and now not appearing indicators of improvement as export incentives had been lower pending refunds for IGST and ITC. Production and common trade cycle remain adversely impacted, particularly for smaller devices, who nonetheless grapple with issues like unemployment and revenue loss. Manufacturers are not able to benefit from the great demand,” said Sanjay Jain, chairman, Confederation of Indian Textile Industries (CITI).

The country’s greatest man-made material (MMF) trade in Surat, the place a political uproar was once created over GST forward of state meeting elections ultimate 12 months, has noticed 40,000 people losing their jobs and production of gray fabrics reduced from four crore metres to two crore metres an afternoon as weavers don’t get the benefit of ITC, said trade gamers.

Real Estate

Real estate sector in Gujarat has roughly remained stagnated for over 5 years now. While GST did motive an efficient increase of four%-Five% in the total cost of a assets to the consumer, it has now not impacted demand. “In truth, it is just right for customers, as builders will now get the benefit of input tax credit for any increase in raw subject material prices. Hence, these additional input costs might not be handed directly to the patrons,” said Ashish Patel, president, GIHED-CREDAI.

Although GST rates to eight% for affordable housing and 12% for different segments of housing, these different rates have robbed the trade gamers of a level playing box. The trade body, NAREDCO, has advised that there could be 6% acceptable price to all classes of housing. The 12% GST on beneath construction homes will have to be re-visited as 0 GST on able ownership homes has created disadvantageous situation for under-construction homes.