India’s massive tax overhaul may have been painful for small and medium businesses (SMEs), but the country’s big corporates seem to love it.
Around 77% of chief financial officers (CFOs) surveyed by Deloitte this year said the goods and services tax (GST) has had a positive impact on the overall business climate. Most of the 250 CFOs felt that both revenue collections and the supply chain benefited from it. And 58% of the CFOs polled felt the ease of doing business had improved as a result.
The GST has had a bumpy ride in its first year, especially for the SMEs and exporters, and the Narendra Modi government has been panned for its botched implementation of the tax reform. So far, the new indirect tax regime has undergone several tweaks, from a change in the tax slabs to streamlining of the filing norms. Yet, a number of export bodies have still complained about procedural glitches that delayed disbursal of refunds.
“Introduction of the GST necessitated a relook at the existing business models by CFOs. It had far-reaching implications on business functions, where the impact was on taxation, finance, legal, IT (information technology) systems, and supply chain,” said Porus Doctor, partner at Deloitte India. “Overall, GST’s value proposition has been appreciated by CFOs.”
It’s not all good news, though. About two-thirds (66%) of CFOs surveyed said that the Indian industry witnessed a negative impact on working capital, and 55% thought that finance costs took a hit.
Meanwhile, from the Modi government’s point of view, revenue collection has posed a problem.
In the first nine months since the new indirect tax regime was implemented in July 2017, the average revenue collected stood at Rs89,885 crore. The number declined to Rs9,4016 crore in May from over Rs1,03,458 crore in the month before. The government had said that the April revenue figure was higher because of a year-end effect.