The introduction of the Goods and Services Tax was supposed to be a game changer for the Indian economy. The one nation, one tax was supposed to make business simpler and benefit end consumer. On the eve of the first anniversary of the introduction of the GST, The Indian Express speaks to Shrikant Paranjape, president, CREDAI Pune Metro, to understand the journey so far
How has been the overall experience of the industry with the GST? Are there major glitches that are affecting you?
Barring the initial teething troubles, the experience has been good. If you are computer savvy, you can easily navigate your way through the system. For urban players like us, we have faced little trouble but connectivity is still an issue with the rural players. Overall, I can say the experience has been good.
When the one nation, one tax was promulgated, it was said that property prices will come down. Has it happened? If no, why?
The real estate sector finds itself in a peculiar position where they are getting input credits for some portions of the goods and services, but for the major component, there is no input credit. Thus, for land and government taxes, like development taxes etc, which form the major component of our expenditure, there is no input credit and we are not able to pass on the benefit to the end customer.
The input credit that we get is, however, too small to make any lasting support to the end customer. Also, as against the 5-6 per cent total taxes that we were paying in the earlier regime, we have been bracketed under the 12 per cent tax slab. It has made our expenditure go up. The raw material manufacturers are yet to pass on their input credit benefits to us by reducing the prices of raw material like cement, steel etc. Any end-price correction has not happened.
What are the main demands by the industry before the GST council? How many of them have been heard till date?
One of the main demands by the industry was to reduce the overall tax slab on the industry. The land component was not getting us any input credit, which we had pointed out. This industry is peculiar in the sense that the raw material, like land, is not taxed but the construction period is taxed. We had asked for clarity on this component.
Also, in case of redevelopment, there is multiple taxation, which is a major impediment for the sector. We have asked for a single point tax on such schemes, which is necessary for projects to be undertaken in cities like Pune and Mumbai. There should be no taxes on TDR (transfer of development rights) transactions.
Input credits for rented properties is also a grey area that needs clarity.
In the long term how do you see the GST regime playing out?
In the long term, GST will prove beneficitial. However, there are leakages that need to be plugged and the over all tax slabs have to be brought down. For our industry, we are taxed for a period… So, we might not enjoy the long-term benefits of this but overall the plugging of leakages will help the economy.