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GST: Crisil says 6 months reqd for stability, benefits in 3yrs

Press Trust of India  |  Mumbai 

Domestic ratings agency today said it will take six months for industrial stabilisation after is introduced but gains of the biggest indirect reform will take up to 3 years to materialise.

"Industry stabilisation, under the new regime, will take a couple of quarters. However, the benefits of on business practises and company strategies will be seen only in the medium term of 1-3 years," its research wing said.

Of the two, the efficiency in goods will be higher than that in services, it said in a note.

As against the present system where arbitrage plays an important role for manufacturers, a seamless treatment in the regime will eliminate the need of multiple warehouses across states.

Companies will modify their supply chains based on the assessment of saving, inventory carrying cost and response time to meet market demand, it added.

Commenting on the rates, it said for major sectors the e rates announced by council are mostly in line with the present effective incidences, while there is a marginal difference in consumer durables, construction material and FMCG.

saving will be relatively higher in automobiles sector, specifically sports utility vehicles (SUVs), as the incidence will reduce from current effective rate of over 50 per cent to 43 per cent (28 per cent plus 15 per cent cess), it said.

Beyond the existing warehouse hubs located near urban centres, there will be an emergence of other warehousing hubs which will prove effective for pan India logistic players.

The all-powerful Council today finalised four rates of 5, 12, 18 and 28 per cent for services including telecom, insurance, hotels and restaurants under the biggest reform since the Independence.

The rates are in line with those finalised for goods. With this, rates of all items except a handful including gold, have been decided ahead of the roll out of the Goods and Services (GST) regime from July 1.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 19 2017. 21:42 IST