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Other benefits for businesses Direct dispatches Opportunities in imports Depot Roadmap Savings in manufacturing CST Service tax credits Source: EY analysis Consumers are expected to benefit from reduced prices of goods and services, which in turn increase consumption. Improved demand, and simplified tax structure will help attract increased FDIs and FIIs and boost overall economic growth. At the same time state and Central governments are likely to benefit from a broader tax base. … however, there are some concerns Spike in inflation over the short term There is a risk of price hikes in the short run if tax rates are very high. “If rates are high, these will lead to inflation, which will be detrimental to consumers. The empowered committee had suggested a revenue-neutral rate of 27%; it should ideally be below 20%. Earlier studies had suggested that it should be between 12%–16%, if goods have to be competitively priced and there is no inflationary pressure,” said Harsh Mariwala, Chairman of Marico . Moreover, companies from sectors such as automobiles, pharmaceuticals, consumer products and food processing, which enjoy benefits of tax (excise, VAT, income tax) concessions by setting up factories in the states, which offer concessions, will be affected adversely by GST. Their cost of production could go up, in turn, leading to increased prices. The phenomenon of spike in inflation was observed in other countries where GST was implemented. In these countries, prices shot up in the short run. Inflation stabilized as the implementation gained pace and there was more clarity among consumers and manufacturers. In India, sharp increase in inflation is likely to be tricky. 8 | The retailer
Impact of GST implementation in various countries Australia New Zealand Canada Introduction year 2000 1986 1991 Rate(s) (%) 10 10 – initially 12.5 – raised later Economic phase when introduced Sustained economic growth End of recession, subsequent upswing Price changes Short-term increase Short-term increase in prices; no significant long-term increase 15 In the middle of recession Short-term spike in prices; no significant long-term increase Revenue effect Revenues exceeded expectations Revenues exceeded expectations Revenues exceeded expectations Current account Slight improvement since introduction Immediate rapid improvement; stabilized in longer term Dramatic improvement since introduction Source: Tom Bolton and Brian Dollery Risks in GST implementation Disruptions in business operations, IT, cutover Loss of sale/no-clarity on impact on SMEs and traders Getting manufacturing strategy wrong Sub-optimized distribution leading to higher costs Getting pricing wrong Administrative procedures not clear (contracts/liabilities) Non-compliance Investment risks go-live date postponed Source: EY analysis The retailer | 9
Page 1 and 2: The retailer EY’s publication in
Page 3 and 4: Contents ABC of GST and the key bus
Page 5 and 6: GST is a need of the hour The need
Page 7: Overall impact of GST is anticipate
Page 11 and 12: Nitesh Mehrotra Director Nitesh is
Page 13 and 14: Alternate therapy services: signifi
Page 15 and 16: Strategies to develop a successful
Page 17 and 18: Ravi Kapoor Director Krishnaprasad
Page 19 and 20: This year’s survey brings good ti
Page 21 and 22: Analytics: stretching your customer
Page 23 and 24: Nitin Mehta Director Sneha Gandhi S
Page 25 and 26: Notes The retailer | 25
Page 27 and 28: Our offices Ahmedabad 2 nd floor, S

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