Complimenting the government and Finance Minister Arun Jaitley over the passage of Goods and Services Tax (GST) Bill, Hindustan Construction Company’s Chairman and Managing Director Ajit Gulabchand says implementation of the tax is a bigger challenge.
Implementation of GST Bill will require a huge electronic platform on one hand and changing the practices of filing returns on the other, Gulabchand said. “There is a very complex structure that would be required, which must work with the system integration, in a seamless manner for it to succeed,” he added.
He said it will take at least 4-5 years after implementation for GST-related issues to settle down before it starts becoming really fruitful for the country.
He also expects GST rates to lower five years after the implementation of GST. “I expect that the goods and services tax (GST) rates can come down because it will lead to a better collection, it will lead to lowering of the taxes to get the same amount of revenues. That would mean advantage particularly for a company like ours,” Gulabchand told CNBC-TV18.
Below is the transcript of Ajit Gulabchand’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.
Anuj: We have discussed how it was a historic day in terms of pushing the reform momentum in terms of single tax structure. But your first thoughts.
A: First, I would like to congratulate Mr Narendra Modi’s government, particularly the Finance Minister for bringing about this momentous task and making it happen. It is not easy to get 26 states and 26 parties and bring this to a conclusion. This augurs well for India, because India needed a common market and we now can see that happen. And that is quite an extraordinary reform, very much needed at a gloomy time at this time and we hope now that this will bring about a sea change once again like relicensing did in terms of bringing about an increased prosperity to this land.
Sonia: For an industry like yours, what kind of an impact do you see? There will not be any direct impact for sure, but indirectly, whether it is greater price competitiveness, reduced costs, reduced supply chain or improved supply chain mechanisms, etc.
A: Certainly, for particularly companies that are working all over the country, as well as sourcing from all over the country, this stands to create a great benefit for them. Because once you can get set offs against the supply taxes and supply costs, you are going to get a lower regime of tax. As soon as the first five years where the Centre has promised the states to fill the gap, once that period is over, I expect that the goods and services tax (GST) rates can come down because it will lead to a better collection, it will lead to lowering of the taxes to get the same amount of revenues. That would mean advantage particularly for a company like ours.
However, I do wish to caution here somewhere. If you thought the 13 years it took to get to the GST in place in India with a little more procedural stuff left of the states passing it, the Lok Sabha again passing the amendments and the President signing on the bill, barring that, the bigger challenge than making this happen would be to actually implement it because implementing needs a huge electronic platform on one side, changing practices of filing returns on the other side, there is a very complex structure that would be required which must work with the system integration manner in a seamless manner for it to succeed.
So, I think this is going to take some time. I would put it down to at least after the first GST is introduced and starts working it will take at least 4-5 years for issues to settle down before it starts becoming really fruitful for us. So, I would caution that the implementation is serious matter and is far more difficult than getting the act passed, while it may not seem so at this time.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
