Arguably one of the biggest tax reforms in independent India, GST finds itself making inroads slowly but steadily.

With the sticky issues of dual control and jurisdiction over high seas settled in the recently concluded meeting of the Goods and Service tax (GST) Council, the much awaited GST regime finds itself one step closer to reality. Arguably one of the biggest tax reforms in independent India, GST finds itself making inroads slowly but steadily as the Union Finance Minister cites July 1, 2017 as a more ‘realistic’ date for implementation.

With multiple GST rate structure agreed for various goods and services, it is apparent that GST may not be introduced in its pure form in India i.e., there should be uniform tax rate for all goods and services across the country. The current approach and speculations around GST tax rates and its implementation date have left the common man worried about how this paradigm shift in the taxation structure is going to impact his pocket.

Similarly, looking at the rate change in isolation, it appears that services such as saloon, tuition, gymnasium etc. consumed by common man would become costlier as the rate is likely to increase from 15% to 18%. However, if the benefit of additional tax credits (VAT paid on goods used by service provider, Central Sales Tax (CST) etc.) is passed on to the end consumer, even services may not become costlier or perhaps may become cheaper.

In a nutshell, GST appears to be a mixed bag with certain necessities getting cheaper, while the others are likely to disturb household budgets. Irrespective of the above, the economic history of various countries suggests that while introduction of a Value Added Tax in the form of GST has seen an inflationary trend in the initial 12 to 18 months, eventually the market competition and dynamics are bound to take charge and force businesses to pass on the benefit to the consumers resulting in overall growth in the economy.

The anti-profiteering provision contained in the draft GST law also refrains businesses from pocketing the gains of GST, and if necessary can be used to help ensure the benefit of GST is passed on to the consumers.

Mr. Vikrant Batra  on Pre Budget –
“A great move by our Prime Minister for initiating and taking the bold step of demonetization to eradicate black money in the economy. It is still too early to predict how successful it has been but it would be safe to say that the move took every by a storm. Talking about this year’s budget, we will expect a lot of opportunities from our Prime Minister to settle the economy and help everyone. I feel the motive behind demonetization was to get everybody into the tax bracket and subsequently bringing the tax down so that the people are encouraged to go through the process of taking the route of eradicating black money. Each and every transaction should be monitored and taxed. Having said that the government will also have to give a relaxation in the slab of taxes, the percentage has to come down so that people are encouraged to pay taxes.”
“It is a great initiative by the Government and we hope that we are able to launch it in the next financial year. It is not about the tax, the biggest challenge that all entrepreneurs and industrialists face are the various departments in filing the returns. Half of the time of an organization goes into that. If there is one agency; one department to handle, we save a lot of resources – the stationary comes down, the man hours involved in the procedure comes down. Thereby increasing the efficiency of the organization. It also gives you a sense of relief that now there is one tax which is followed world wide by lots of developed and developing countries.It is a great initiative where our developing country will become a developed one.”

 Shishir Baijal, Chairman & Managing Director, Knight Frank India:

“The Union Budget 2017-18 is a much awaited one considering that it comes against the backdrop of a challenging year for the real estate industry. There needs to be a balance between demand and supply sides to ensure a surge in sentiment and investment opportunities. A boost in the sentiment is extremely important in fuelling the growth of the real estate industry.

We expect the budget to reflect fiscal discipline and to provide homebuyers some cheer in the form of increasing the prevailing interest exemption of Rs. 2 lakh for a single home loan. We also expect a separate deduction limit for home loan principal repayment. The Prime Minister has already offered a phenomenal incentive under the Pradhan Mantri Awas Yojana (PMAY) to home buyers during his year end speech.

However, the loan limits should be increased for major metros and made more realistic to bring in cities like Mumbai within the purview of this scheme. Continued emphasis on infrastructure should also be a priority in this subdued environment. There needs to be a focus on getting peripheral areas integrated with the mainstream city to further push the cause of affordable housing segment.

The other important focus areas are the GST rates and taxation aspect of REITs and we expect the budget to provide clarity on them.