Most Businesses Have No Idea What GST Brings, Say Reports
India is set to enter the Goods and Services Tax (GST) era at midnight but those who run small and medium enterprises have no idea what the sweeping tax reform brings, a report by Bank of America Merrill Lynch (BofA-ML) has said, adding that stores have been using GST to clear their stock.
According to BofA-ML, the top leadership in corporates needs more time to understand GST and instruct the subordinate staff.
New Delhi: India is set to enter the Goods and Services Tax (GST) era at midnight but those who run small and medium enterprises have no idea what the sweeping tax reform brings, a report by Bank of America Merrill Lynch (BofA-ML) has said, adding that stores have been using GST to clear their stock.
“We spoke with managers and store keepers of several retail outlets in Mumbai – none seem to have any idea of how the GST will impact their businesses or product prices. Most are still waiting to be guided by ‘senior / company management’; many are using the GST to urge consumers to buy ahead of the change. This indicates corporates still need time to: a) understand the GST themselves, and b) then communicate the impact / change to end chain of staff,” the report by Sanjay Mookim, India equity strategist at Bank of America Merrill Lynch, said.
According to BofA-ML, the top leadership in corporates needs more time to understand GST and instruct the subordinate staff. “With help, most will learn the new filing system. The current destocking is likely to create an interesting effect later in the year,” the report said, adding that a combination of festive season sales, re-stocking post GST and better consumer appetite could result in a strong growth numbers in December.
Another report by research house Edelweiss said the lack of preparedness may lead to short-term costs in terms of time and money. “Our interactions with dealers, manufacturers and GST facilitators suggest that the SME (Small and Medium Enterprises) segment is not only struggling for preparedness, but also staring at rising manpower and compliance costs which could disrupt their business and impact cash flows,” said the June 27 report titled GST: Get, Set, Go.
It, however, added that the new taxation regime will usher in a much simplified tax structure, resulting in cost inefficiencies.
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