One year since the implementation of GST in India, some businesses are still struggling, while others see the benefits of new taxation regime. AP Photo
One year since the implementation of GST in India, some businesses are still struggling, while others see the benefits of new taxation regime. AP Photo
One year since the implementation of GST in India, some businesses are still struggling, while others see the benefits of new taxation regime. AP Photo
One year since the implementation of GST in India, some businesses are still struggling, while others see the benefits of new taxation regime. AP Photo

One year on: GST still haunts some of the Indian businesses


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Metro Shoes, like many other companies in India had to do an overhaul of how it did business a year ago – to get to grips with the introduction of a new goods and services tax, or GST.

The footwear retail chain put a new IT system in place to meet the GST invoicing requirements and  its tax team underwent rigorous training to be able to comply with the new taxation regime.

“It was natural that there were a few issues in implementation of GST in our company,” says Alisha Malik, the vice president of marketing and e-commerce at Metro Shoes. “It changed the business processes regarding billing and filing of various returns.”

With the footwear market in India being largely an informal, unstructured sector, there was confusion all around and businesses took hit in the run up to the GST as well in the months following the implementation of the levy. However now, one year on, things have generally stabilised for Metro, Ms Malik says.

GST, launched on July 1 last year is one of the biggest economic reforms to take place in Asia's third biggest economy. It was long awaited, having been mooted more than a decade before it was finally effected, replacing a host of taxes across the country's 29 states with a uniform, single tax regime.

Under GST, different products come under different slabs, but are taxed at the same rate across the country.

“GST is definitely one of the biggest fiscal reforms that our country has witnessed,” says Dushyant Jani, the founder and chief executive of Mobclixs Technologies, a digital media firm based in Mumbai. “There is a long list of benefits, which are being claimed as a result of the GST law. We now only have to face a single goods and services tax instead of various excise, sales, [and] service taxes.”

But some businesses are still struggling with GST, particularly, the small businesses, many of which saw their costs base significantly expanding as they had to spend more on accountants' fees and IT infrastructure to comply with the online filing systems. Having to make more frequent tax payments under GST has sapped them of much-needed cash.

Himanshu Parekh, a sari trader in Mumbai, explains that the textiles manufacturing industry has faced challenge.

“The production part at the looms level which we get done at small towns and villages, labourers there had issues with the implementation of GST because they don't know how accounting functions,” he says.

It did not help that GST came into effect while many in India were still reeling from the impact of demonetisation, when the government scrapped the two highest value banknotes from circulation in November 2016. The combined effect of these two initiatives has put many smaller entrepreneurs out of business in India.

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“Exporters have been really been disappointed with the GST roll out,” says Rahul Agarwal, the director  of Wealth Discovery, a financial services company headquartered in New Delhi. “Delays in processing tax refunds under the new GST regime have locked up the funds of exporters, which has been a serious drag on their business.  Exporters are struggling to stay competitive in the international markets.”

While the transition may be tough, many argue that India's economy will ultimately benefit.

“Unorganised sectors don’t want to become organised as they are still reluctant to pay taxes,” says  Amit Kachroo, the managing partner at Aaneev Wealth, a asset and wealth management company. “There are certain businesses, which want to trade in cash only.”

But he says that GST is a positive step in the right direction as it is forcing many such businesses to clean up their processes and enter the formal economy, which will ultimately help reduce tax evasion and improve tax collections.

Although, the short-term impact was negative, some analysts forecast that in the longer term, GST's contribution to Indian gross domestic product could account for up to 2 per cent.

GDP growth slowed to 6.7 per cent in the financial year to the end of March, compared to 7.1 per cent a year earlier, according to figures from the Indian government. However, in the fourth quarter between January and March, growth picked up to 7.7 per cent, suggesting that things are taking a turn for positive.

Also, the tax base has widened under GST, with 11.2 million business registered under the new system compared to 6.4 million previously, official data shows and for its part, the Indian government claims that GST has been a success.

“The goods and services tax is one of the most significant systemic reforms that our country has undergone,” India's prime minister Narendra Modi, said on Tuesday, speaking at a conference in Mumbai. “It reduces tax cascading, increases transparency, and adds to logistics efficiency. All of this makes it easier for the investor to do business in India.”

The government introduced a number of changes to GST over the course of the year, as it has tried to manage some of the challenges. These adjustments included  lowering the GST tax rates on items ranging from stationery and diesel engine parts -- both reduced from 28 per cent to 18 per cent. Rate of levy on dried mango for example was also slashed from 12 per cent to 5 per cent, as companies struggled in the wake of higher rates of taxation.

While smaller and medium-sized businesses took the brunt of GST, some of the larger companies in sectors such as real estate also felt the impact of the levy over the course of last year.

“For the real estate sector, GST has seen a mixed bag, with the sector still grappling to completely understanding it,” says Ramesh Nair, the chief executive and country head at property consultancy JLL India. “There are different tax computation methods for different projects and phases of the same project.”

Mr Nair admits that having a unified tax policy could “add to India’s attractiveness as an investment destination in the long run” and improve the ease of doing business, but says there is still a long way to go.

“The GST law still has to mature and compliance related processes need to be refined further,” he says. “It is important that the government ensure clarifications on major concerns, which need clarity and once and for all are addressed.”

Meanwhile, Ms Malik at Metro Shoes thinks that the tax system needs a bit of a time to wear in, and her company is already starting to see the benefits.

“Simplification of the tax structure and smooth movement of goods from one place to another are the main advantages,” she says. GST will be good "in the years to come”.

Who has been sanctioned?

Daniella Weiss and Nachala
Described as 'the grandmother of the settler movement', she has encouraged the expansion of settlements for decades. The 79 year old leads radical settler movement Nachala, whose aim is for Israel to annex Gaza and the occupied West Bank, where it helps settlers built outposts.

Harel Libi & Libi Construction and Infrastructure
Libi has been involved in threatening and perpetuating acts of aggression and violence against Palestinians. His firm has provided logistical and financial support for the establishment of illegal outposts.

Zohar Sabah
Runs a settler outpost named Zohar’s Farm and has previously faced charges of violence against Palestinians. He was indicted by Israel’s State Attorney’s Office in September for allegedly participating in a violent attack against Palestinians and activists in the West Bank village of Muarrajat.

Coco’s Farm and Neria’s Farm
These are illegal outposts in the West Bank, which are at the vanguard of the settler movement. According to the UK, they are associated with people who have been involved in enabling, inciting, promoting or providing support for activities that amount to “serious abuse”.

Your rights as an employee

The government has taken an increasingly tough line against companies that fail to pay employees on time. Three years ago, the Cabinet passed a decree allowing the government to halt the granting of work permits to companies with wage backlogs.

The new measures passed by the Cabinet in 2016 were an update to the Wage Protection System, which is in place to track whether a company pays its employees on time or not.

If wages are 10 days late, the new measures kick in and the company is alerted it is in breach of labour rules. If wages remain unpaid for a total of 16 days, the authorities can cancel work permits, effectively shutting off operations. Fines of up to Dh5,000 per unpaid employee follow after 60 days.

Despite those measures, late payments remain an issue, particularly in the construction sector. Smaller contractors, such as electrical, plumbing and fit-out businesses, often blame the bigger companies that hire them for wages being late.

The authorities have urged employees to report their companies at the labour ministry or Tawafuq service centres — there are 15 in Abu Dhabi.

Biog

Mr Kandhari is legally authorised to conduct marriages in the gurdwara

He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada

Father of two sons, grandfather of six

Plays golf once a week

Enjoys trying new holiday destinations with his wife and family

Walks for an hour every morning

Completed a Bachelor of Commerce degree in Loyola College, Chennai, India

2019 is a milestone because he completes 50 years in business

 

The Settlers

Director: Louis Theroux

Starring: Daniella Weiss, Ari Abramowitz

Rating: 5/5

Another way to earn air miles

In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.

An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.

“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.

Company%20profile%20
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Pakistan squad

Sarfraz (c), Zaman, Imam, Masood, Azam, Malik, Asif, Sohail, Shadab, Nawaz, Ashraf, Hasan, Amir, Junaid, Shinwari and Afridi

COMPANY PROFILE

Name: Cofe

Year started: 2018

Based: UAE

Employees: 80-100

Amount raised: $13m

Investors: KISP ventures, Cedar Mundi, Towell Holding International, Takamul Capital, Dividend Gate Capital, Nizar AlNusif Sons Holding, Arab Investment Company and Al Imtiaz Investment Group 

VERSTAPPEN'S FIRSTS

Youngest F1 driver (17 years 3 days Japan 2014)
Youngest driver to start an F1 race (17 years 166 days – Australia 2015)
Youngest F1 driver to score points (17 years 180 days - Malaysia 2015)
Youngest driver to lead an F1 race (18 years 228 days – Spain 2016)
Youngest driver to set an F1 fastest lap (19 years 44 days – Brazil 2016)
Youngest on F1 podium finish (18 years 228 days – Spain 2016)
Youngest F1 winner (18 years 228 days – Spain 2016)
Youngest multiple F1 race winner (Mexico 2017/18)
Youngest F1 driver to win the same race (Mexico 2017/18)

MATCH INFO

Champions League quarter-final, first leg

Ajax v Juventus, Wednesday, 11pm (UAE)

Match on BeIN Sports

SPEC%20SHEET%3A%20NOTHING%20PHONE%20(2)
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How to watch Ireland v Pakistan in UAE

When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.

The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
The specs

AT4 Ultimate, as tested

Engine: 6.2-litre V8

Power: 420hp

Torque: 623Nm

Transmission: 10-speed automatic

Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)

On sale: Now

Mobile phone packages comparison
India cancels school-leaving examinations
THE CLOWN OF GAZA

Director: Abdulrahman Sabbah 

Starring: Alaa Meqdad

Rating: 4/5

Brief scores:

Pakistan (1st innings) 181: Babar 71; Olivier 6-37

South Africa (1st innings) 223: Bavuma 53; Amir 4-62

Pakistan (2nd innings) 190: Masood 65, Imam 57; Olivier 5-59

PSA DUBAI WORLD SERIES FINALS LINE-UP

Men’s: 
Mohamed El Shorbagy (EGY)
Ali Farag (EGY)
Simon Rosner (GER)
Tarek Momen (EGY)
Miguel Angel Rodriguez (COL)
Gregory Gaultier (FRA)
Karim Abdel Gawad (EGY)
Nick Matthew (ENG)

Women's: 
Nour El Sherbini (EGY)
Raneem El Welily (EGY)
Nour El Tayeb (EGY)
Laura Massaro (ENG)
Joelle King (NZE)
Camille Serme (FRA)
Nouran Gohar (EGY)
Sarah-Jane Perry (ENG)

The 10 Questions
  • Is there a God?
  • How did it all begin?
  • What is inside a black hole?
  • Can we predict the future?
  • Is time travel possible?
  • Will we survive on Earth?
  • Is there other intelligent life in the universe?
  • Should we colonise space?
  • Will artificial intelligence outsmart us?
  • How do we shape the future?
WHAT IS A BLACK HOLE?

1. Black holes are objects whose gravity is so strong not even light can escape their pull

2. They can be created when massive stars collapse under their own weight

3. Large black holes can also be formed when smaller ones collide and merge

4. The biggest black holes lurk at the centre of many galaxies, including our own

5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed

RESULTS
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