88% corporate honchos support GST rollout: CII-KPMG

Amid sharp differences between the Centre and state governments over the rollout of Goods and Service Tax (GST), an overwhelming majority of senior executives from various sectors favour introduction of the levy and think it will increase profitability for firms, a survey said.

The Centre, keen to implement the proposed GST from April 1, 2011, had faced stiff opposition on the issue of the Union Finance Minister having a veto power on decisions related to the tax and has reportedly shelved the plan in favour of one based on consensus between all the sides.

The survey, conducted by industry body CII and global consultancy KPMG, also found that industry representatives feel that the single unified tax structure would help in consolidation of business.

"Eighty-eight per cent of the survey respondents prefer having a single national GST enactment, both for Centre and the states," the 'Report on Goods and Services Tax Survey: Industry expectations and perceptions' said.

The study was based on the responses from over 200 senior executives of top companies in diverse fields like auto, FMCG, power and energy, real estate, IT and financial services.

"... Most of the respondents had presence on a pan-India basis and they expect GST to be a unifying fiscal legislation across the national market," the survey added.

Under the proposed plan, all central and state taxes like excise, VAT and service tax will be rolled into GST once the new regime comes into effect. The revenue from GST will be shared equally between the Centre and states.

The central government had last month proposed a three- tier structure for GST under which goods will attract a 20 per cent levy, services 16 per cent and essential items a concessional 12 per cent.

The CII-KPMG study also found that 44 per cent of the executives felt that the GST could be an opportunity to consolidate their business operations, as the proposed changes in the indirect tax structure will transform India into a national market.

"... 84 per cent of the survey respondents feel that GST would have a positive impact on the profitability of the business, as there would be seamless flow of input tax credit with no or very limited cascading of taxes," CII-KPMG said.

The survey found that industry representatives feel any upward revision of service tax due to implementation of GST would have a "moderate to high" impact.

"They (industry representatives) are realistic enough to know that the cumulative standard rate of GST may not be less than 14-16 per cent. But nevertheless, they would much prefer the tax to be collected at a single rate for both goods and services," it said.