GST Becomes A Reality

While the nation attempts to adjust to the new reality – GST, we try to look at the opportunities that the new tax reform presents to the investors

- Yogesh Supekar

As GST becomes a reality in India and business houses attempt to adjust to the new normal, it is extremely important to assess which sectors and industry will be most impacted by the historic tax reform that has been long awaited in India.

GST will be enforced starting July 1 and markets dynamics will take its own course influencing stock prices.

The benefits of GST are well documented and by now it is a given that GST is expected to boost the tax collection by broadening the base of tax payers and bring in supply chain efficiencies in the medium to long term. This outcome of GST implementation for sure will benefit immensely the organised trade. As layers of taxation reduce, the ease of doing business becomes a reality.

While the GST can bring in economies of scale for several businesses and can be expected to drive consolidation in logistics and warehousing segments, the worrisome aspect will remain the fear of inflation.

The inflation is a real danger as a consequence of GST implementation. Empirical evidence shows that inflation has risen whenever GST has been implemented in any particular economic region.

According to Sanjeev Zarbade, VP-PCG Research, Kotak Securities,”GST is a tax trigger which will facilitate “ease of doing business” and simplify tax compliance. In the near term, some increase in costs is expected on account of the formalisation of the GST regime, hence CPI inflation is likely to see some increase.