GST will change the way India does business
10 August 2016
The Indian parliament finally passed the Constitutional Amendment Bill paving way for the introduction of a comprehensive consumption based goods & services tax (GST). As next steps, at least 50% of the States would need to ratify the proposed amendments to the Constitutional Amendment Bill, followed by a Presidential assent to a change in the Constitution.
Under GST, the majority of the current indirect taxes would be subsumed into a single comprehensive tax on supply of goods and services. GST is expected to not only have an impact on Companies' taxes, but also their entire business. It will affect pricing, working capital, supply chain, vendors and customers contracts, ERP systems and internal control across sectors, making it imperative for companies operating in India to assess their own preparedness for the introduction of GST.
Manufacturing and retail & consumer sectors are expected to benefit the most from the introduction of GST, giving further momentum to the Government's "Make in India" theme.
The Government seems determined to introduce GST by April 2017 (or with a delay of a few months) with the Finance Ministry already releasing a roadmap for its implementation by that time period.
Partner, Deals, PwC India
Partner, Tax and Regulatory Services, PwC India