With GST coming into force, a major rubicon has been crossed in the realm of tax adminisration. Initial reports suggest that it has been a smooth transition for the F&G industry, although there have been some minor hiccups here and there. But that is only to be expected whenever the old order gives way to the new. But before long, one hopes that the initial teething problems will be ironed out and all stakeholders will learn to jump through the GST hoops effortlessly.
As the most significant tax reform till date, GST has many benefits to offer. In one swift stroke, it has merged a large number of Central and State taxes (estimated at 25-30 per cent) into a single (reduced) tax under HSN Code & SA Code. Prior-stage taxes are now a thing of the past, paving the way for the creation of a Common National Market and better gains for both Central and State governments.
For the wholesalers and retailers, the new regime ushers in an era of greater transparency and tax compliance with the complete value chain tracked online. In the new scheme of things, changes are expected in the ways of doing business and margins are expected to grow thinner for both wholesalers and retailers. In this context, it is heartening to note that there have been ongoing discussions between producers and retailers to thrash out the nettlesome issues.
Most analysts concur that post-GST era will lead to more robust economic growth, which will boost consumer sentiment and market confidence. The uptick in business sentiment will boost the premiumisation trend. The profitability of entrepreneurs is also expected to grow once the challenges of complying with the new regulations are resolved.