GST and Malls: Gradually the Picture Becomes Clear
A lot of speculation had been going on since the introduction of GST as to the prices of various goods and services-whether they’ll go up or down? 1 nation 1 tax GST has been introduced in the economy for over 47 days now and gradually the effects of GST on various sectors along with its effect on the tax regime in India is finally coming to light.
Shoppers walk past a store at a mall in Mumbai, India, July 10, 2017. Image: Reuters
After agriculture, retail is the second biggest employer in the country and shopping malls form a formidable part of the Retail Sector in India. A lot of speculation had been going on since the introduction of GST as to the prices of various goods and services-whether they’ll go up or down? 1 nation 1 tax GST has been introduced in the economy for over 47 days now and gradually the effects of GST on various sectors along with its effect on the tax regime in India is finally coming to light. Under the new tax regime the main focus is on the creation of a unified market system along with improving the FDI outlook so as to create more FDI and reduction in transit inventory.
It’s expected that under this new tax regime fast fashion will be the new emerging trend. Shopping mall owners will get doubly benefitted under operations segment as well as taxation, in this new tax regime. The brand i.e. the retail segments that make up a mall will have to now focus on both volume and value which implies that in order to keep pace the brands will have to release more product lines that too at shorter intervals.
A few changes that the mall owners have already started seeing since the implementation of GST are –
Simplification of taxes – GST has simplified taxes by incorporating the many and varied taxes levied on the retailers like service tax, octroi, etc. into one thus making it easier for mall owners to interpret. A lower rental tax along with tax credits or set offs, the expenditure on operations for the retail segment will decrease resulting in growth and increase of revenue.
Better flow of operations – GST will benefit the retail segments by improving the supply chains, logistics and transportation at the inter-state level leading to the procurement of goods being made quick and easy. This will also motivate new competitors to enter the market and spread their business or retail chains to other states as well.
Will benefit the retailers – In the long run GST is expected to benefit both the retail segments as well as consumers as the rate of tax being levied is 18% but at the same time they also have the facility of availing input tax credits. These 2 coupled together will also benefit the consumer in the long run once the tax benefits are passed onto the consumer.
Now for the retail sector GST seems like a boon after all, as it will not only make the tax structure simpler but also ensure that the sector is getting a constant and stable cash flow.
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