 "GST to reduce costs for retailers, boost consumption")
The goods and services tax (GST) is expected to reduce distribution costs of retailers, improve the speed to market and boost overall consumption.
“Retail is the last leg of economy and GST will help retailers by removing cascading effect of taxes,” said Kishore Biyani, group chief executive officer of Future Group. Biyani said GST would help retailers in a big way as they do not get input credit on many costs such as service taxes.
“Now, the informal economy will become formal economy,” he said.
Kumar Rajagopalan, chief executive officer at Retailers Association of India, said: “The GST will reduce distribution costs and reduce wastages as cascading effect of taxes will go.”
He said “the speed to market” would increase, as retailers can produce wherever and sell wherever to meet the demand of consumers. “More importantly, the availability of products will improve for customers.”
Read our full coverage on the GST Bill and its impact
Many in the industry said retailers can centralise their storage and supply chain as GST aims to remove the complexity of multiple state and central taxes and a multitude of exemptions and ensure a seamless flow of input tax credit in the value chain
“It will reduce taxation on most products. If there is pass-through to customers, it will lead to higher consumption of products and is good for everybody in the value chain,” said Harminder Sahni, managing director at Wazir Advisors, a business consultancy.
He said the logistics costs for companies was expected to go down by 8 to 10 per cent. “Overall, prices will come down by 1 to 2 per cent.”
According to Nomura, certain negatives exist for retail companies. “The fact that companies will now need to pay GST as goods leave the factory and not when sold to the clearing and forward agent, will hurt retailers, as they store significant amounts of finished goods inventories for a large numbers of days before the goods are sold.”
“Retail is the last leg of economy and GST will help retailers by removing cascading effect of taxes,” said Kishore Biyani, group chief executive officer of Future Group. Biyani said GST would help retailers in a big way as they do not get input credit on many costs such as service taxes.
“Now, the informal economy will become formal economy,” he said.
Kumar Rajagopalan, chief executive officer at Retailers Association of India, said: “The GST will reduce distribution costs and reduce wastages as cascading effect of taxes will go.”
He said “the speed to market” would increase, as retailers can produce wherever and sell wherever to meet the demand of consumers. “More importantly, the availability of products will improve for customers.”
Read our full coverage on the GST Bill and its impact
Many in the industry said retailers can centralise their storage and supply chain as GST aims to remove the complexity of multiple state and central taxes and a multitude of exemptions and ensure a seamless flow of input tax credit in the value chain
“It will reduce taxation on most products. If there is pass-through to customers, it will lead to higher consumption of products and is good for everybody in the value chain,” said Harminder Sahni, managing director at Wazir Advisors, a business consultancy.
He said the logistics costs for companies was expected to go down by 8 to 10 per cent. “Overall, prices will come down by 1 to 2 per cent.”
According to Nomura, certain negatives exist for retail companies. “The fact that companies will now need to pay GST as goods leave the factory and not when sold to the clearing and forward agent, will hurt retailers, as they store significant amounts of finished goods inventories for a large numbers of days before the goods are sold.”
