Education

Preparing for GST

D. Murali | Updated on May 28, 2011

BL27COMMODITY



With the GST (Goods and Services Tax) still alive as a topic for discussion, despite the electoral defeat of Asim Dasgupta, it may be apt to read the chapter on GST in India Commodity Year Book 2011 from National Collateral Management Services Ltd (www.ncmsl.com).

When GST is introduced, the trade and industry will have to rework their supply chain management and their logistics arrangements so as to reap the full benefits of the tax reform, writes V. S. Krishnan, the author of the chapter. Urging, therefore, businesses to take a re-look at the need for stock transfer of goods, he expects that GST would correct the existing tilt towards trading relative to manufacturing.

The other implication highlighted in the chapter is that the tax system would largely be neutral between small and big units.

“The incidence of duty on the smaller units may slightly increase, especially in the manufacturing sector with the lowering of the exemption threshold. There would be less incentive for the bigger units to fragment on paper and masquerade as smaller units in order to reap tax benefits.”

Krishnan anticipates the GST regime to bring down the cost of compliance for the business units.

“Further, the Centre and the States will have to draw up ground rules so that there is no overlapping of audit, return scrutiny and investigative operations. While the audit and return scrutiny of smaller units/ dealers may be left to the States' GST administration, the compliance verification system of larger units, with pan-India footprint may be assigned to the Centre.”

Useful addition to the commodity professionals' shelf.

Published on May 28, 2011

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