For the first time the government seems to be prepared for goods and services tax (GST) but the corporate world seems to be grappling with the regulation, people in the know said.
Industry experts say that it was a blessing in disguise that the deadline for GST was pushed back as most of the companies may have struggled with it. Even as most of the top companies have roped in some tax and tech specialists to implement GST, some of the mid-scale and small companies are finding it tough to adapt to the indirect tax regime.
The government on its part has uploaded some of the basic tech programmes on several of its platforms to help smaller companies. However, the impact of GST is set to be across the board from taxation, technology and even on a company’s growth strategy.
In many cases some of the larger companies are also helping their vendors to be GST compliant. This is mainly because the onus of the vendor or supplier following by GST regulation would be on these larger companies. And unless that happens the company would not get a tax credit.
There is also a worry that the taxation could create some complications. In some cases the aggregated tax may come up to about 40%..
“Even though change in the peak rate will not alter the four-slab rate structure of 5%, 12%, 18% and 28% agreed upon last year, but is only a provision being built into the model law to take care of contingencies in future. This means the central GST and state GST can be up to 20% each, leaving the scope for a maximum levy at 40%. This aggregate rate of 40% can be expected to be applicable on sin goods,”