GST implementation caused ‘temporary slowdown’: ASSOCHAM-EY study
New Delhi, Nov 13 (IBNS): After its launch in July 2017, there has been a temporary slowdown post implementation of Goods and Services Tax (GST) even though Government of India has ideated and implemented a number of initiatives to improve business conduciveness, noted a recent ASSOCHAM-EY joint study.
“But a consensus view is that India is poised towards a sustainable growth in the near future,” stated the report titled, ‘Ideate, Innovate, Implement: Invest in India,’ jointly conducted by ASSOCHAM and EY.
It said that after GST implementation, with various inter-state check gates being removed and central sales tax (CST) not becoming a cost, inter-state movement of goods has smoothened.
The study also said that GST will have a significant impact on all aspects of businesses operating in the country including supply chain, sourcing and distribution decisions, inventory costs and cash flows, pricing policy, accounting and transactions management.
It further stated that GST will have an impact on prices agreed for contracts entered under pre-GST regime and proposed to be executed either partly or completely under post-GST regime.
“Also, introduction of GST should entail a reduction in overall process on account of reduced tax costs,” it said.
The ASSOCHAM-EY report suggested that central and state governments need to work in tandem by executing investor friendly policies to further strengthen the investment prospects.
“The government is continuously focusing on improving the business environment in the country, but there is still significant scope to attract further investments,” it said.
Highlighting that a complex legal framework makes investors wary of investing in an otherwise promising market, the study suggested that government must urgently carry out effective judicial reforms.
It also stated that factors like robust domestic consumption, investor-friendly strategies, skilled manpower, transparency in Government procedures and responsive policy making, with an immediate focus on effective implementation of reforms, will continue to position India as a preferred investment destination.