The GST is assumed to add 1.5 to 2 per cent to the GDP, which will surely affect the overall growth of Indian healthcare industry in the long run, say market experts.
A promising move to simplify and streamline India’s tax structure, undoubtedly, the Goods and Services Tax (GST) bill has brought big smiles to the Indian startups. This, even though suspense remains on the rate at which GST will be levied.
On one hand, it’s difficult to quantify the impact on diverse sectors until the government announces the final GST rate, analysts are assuming a standard rate of 17-18 per cent, say media reports.
The move will prove beneficial for the manufacturing sector, but the services sector is the one that will lose.
Significantly, the healthcare sector welcomed this amendment with open arms and called it a progressive move for all - eCommerce and consumers.
"The passage of the Goods and Services Tax (GST) Bill in the Rajya Sabha is a progressive measure as it can facilitate seamless movement of goods across inter-state borders enabling better efficiency and spurring growth of the (eCommerce) sector. For consumer, the price points of many products should come down or remain at the current levels (depending on the GST rates) as there will be free flow of credits since the total indirect tax cost embedded in the price is likely to decrease,” said K Ganesh, Serial Entrepreneur and Founder, Portea Medical.
He further suggested, like every regulation, it needs to be implemented correctly and should not make the lives of eCommerce players even more complicated by burdening them with more administrative hassles.
Notably, the fresh amendments to the Bill as cleared by the lower house of the Indian parliament, Lok Sabha, in May 2015, were recently taken up by the Cabinet. The amendments include scrapping the 1 per cent additional tax on inter-State trade. It also proposed that the GST Council shall set up a mechanism to adjudicate disputes arising between the Centre and the States or between States.
Meanwhile, talking about the GST effect on Pharma industry, Dr. Dhaval Shah, Co-Founder of PharmEasy noted, “As it has been observed in other countries, simplification of tax regime is always a step in the right direction. This will definitely impact the pharmaceuticals industry in a much positive way by impacting the availability of medicines across the country. Overall the logistics cost as well as time needed will go down, which is a big plus in a country like India where reach of healthcare products to rural markets is a big concern.”
He further added that the move will have a huge impact on Startup Eco System since as a startup, tax complications are something that you do not want to deal with in your growing phase.
Simplification of the tax regime is something that every startup would appreciate and this will help them focus on their core expertise, which is running the show.
The government is targeting to ratify the bill in at least half the states as soon as possible and bring the remaining laws needed to implement the one-tax regime during the winter session of Parliament.
The fresh amendments also include a provision to ensure that States are compensated for any revenue loss for five years. To ensure that the tax revenue earned by the States does not get stuck in the Consolidated Fund of India, a new clause has been proposed.
As per the roadmap announced by Indian finance minister Arun Jaitley, the target for implementing the GST is April1, 2017.