Tax Test

On the first anniversary of the GST regime, industry experts review the year gone by and suggest crucial reforms and changes

- Riddhi Doshi

 

Last July, the Goods & Service Tax (GST) was implemented with the promise of creating one, central market in the country. The initial phase of the new tax regime was marked by unprecedented confusion, followed by several revisions to the tax structure. A year after, while addressing the nation on his radio show Mann Ki Baat, Narendra Modi hailed the tax as a tool that has brought growth, simplicity and transparency to our economy. ‘Ease of Doing Business, benefitting small and medium enterprises,’ the Prime Minister tweeted.

For the luxury industry, however, the tax regime is a mixed bag. Many businesses are still unsure about the tax structure, especially tax credit returns. “Overall, there is much confusion about what falls under luxury and what doesn’t,” says Kumar Rajagopalan, CEO of the Retailers Association of India. The government had initially listed all furniture pieces and some kitchenware under the highest tax bracket of 28 per cent, but revised the bill later.

The lengthy process to move a product from one outlet to another is a bigger challenge. Under GST, a retailer must produce an e-way bill to do so. This takes time, delays sale, and sometimes also results in the loss of a deal. In the luxury retail industry, it’s common practice to store a product in one outlet and ship it to another for a client. “No luxury retailer anywhere else in the world has to produce an e-way bill,” says Rajagopalan.