Forbes India – August 4, 2017

SHaiLeSH aNDraDe / reUTerS

issues, which lead to challenges around indirect taxes, and
lack of uniformity. A tax rate of 12 percent under GST looks
constructive for the industry. This will free home buyers
and investors from the hassle of paying several state taxes
at different levels, removing the double taxation impact.
This is expected to further provide a boost to the housing
sector, along with the benefits accrued through RERA.

Challenges for banking and financial sectors
Under GST, banks/NBFCs, which have pan-India
operations, would need to obtain a separate registration for
each state as opposed to a single ‘centralised’ registration
followed previously. Besides, compliance burden about
filing of returns has also increased—in terms of the
periodicity of returns, number of return formats and level
of details required in these returns.
Every registered branch of banks and NBFCs must
justify its position on chargeability in the respective state
and reason for utilising input tax credit in different states.
The adjudication process will also get prolonged as more
than one adjudicating authority will be involved and
each authority may hold a different opinion on the same
underlying issue.

Marginal hike in BFSI service tax
With the hike in service tax from 15 percent to 18 percent

under the GST regime, certain services from BFSI

(banking, financial services and insurance) will become

marginally expensive. This will include fees levied by

mutual funds, charges on banking services like ATM

usage as well as part of the premium paid to insurance

companies. However, the incremental benefit that the

industry will accrue in terms of specific improvements

across sectors like MSME and real estate, and generic

improvements in industries across the board should far

offset any potential downside to the financial services

industry in the long term.

Base set for strong growth

It is estimated that from 2018-19 onwards, India should

cross the 8 percent GDP growth rate driven by the

organic improvement in the economy coupled with the

GST upshot. Consumption is already on an uptick. The

global economy is also improving and commodity prices

have firmed up. So when you add up all this with the fact

that oil prices continue to remain low, India is geared for

strong growth going forward. In the long run, GST could

potentially add 1.5-2 percent to the GDP and I would not

be surprised to see double digit growth in the economy for

a sustained period of time.

(The writer is chairman and

CEO of Edelweiss Group)

august 4, 2017 forbes india | 19

Three to six months down the line, we will start to see the incremental benefits of GST trickling in

a BJP supporter participates in a rally supporting the Goods and Services Tax (GST). The tax, which was implemented from
July 1, is expected to improve the ease of doing business and improve the overall economic outlook of the country