With 50% more assessees entering the tax net GST has obviously been positive, if not immediately, at least for the long term. The country’s GDP however has moderated since its start. But I think that is more due to global headwinds and not so much due to GST. As expected, the highly digitised and completely new model of GST did bring some teething troubles with it. On the whole, the cascading tax effect has almost been nullified. Of course, no one can deny the improvement in ease of doing business. Barring the impact of global headwinds, the economy seems to be on the path of progress.
The building materials industry has received its share of benefits on account of reduction in rates to 18%, which is a lower tax when compared to the earlier regime. Pass through credit has made it easier for a new breed of tax payers to enter the net. This will create a good level playing field, as the organised players will have better prospects for growing their business.
As we move into the second year, the next steps in GST should be further simplification, improvement of technology for compliance, and speedier refunds to exporters. Among the key positives of the first year of GST implementation were a smoother than expected start, seamless transfer of input credit and goods at borders, and improved transparency in transaction.
There were a few negatives too. The key issues were negative impact on working capital cycle, some cost of input still being left out of pass through, and some sectors still not a part of the system.
Implementation of GST was quite satisfactory and industry players were quick to identify problem areas. Adoption of the new system was quite fast by all stakeholders, given the time frame and long history of the older tax regime. Going forward, I believe that the realty sector will be fully integrated into GST. For building material suppliers this will be a positive with full pass through. The focus of suppliers will be less on tax related disputes, leading to more time for productive development of business.
As for the e-way bill, it has of course improved ease of doing business. The new system is less prone to corruption and has also reduced transit time. The results are already visible.