An overwhelming majority of senior executives from various sectors favour introduction of the proposed Goods and Services Tax and think that it will increase profitability for firms, according to a survey by industry body CII and global consultancy KPMG.
The study also found that industry Representatives feel that the single unified tax structure would help in consolidation of business.
"Eighty eight per cent of the survey respondents prefer having a single national GST enactment, both for Centre and the states," the 'Report on Goods and Services Tax Survey: Industry expectations and perceptions' said.
The study was based on response from over 200 senior executives of top companies in diverse fields like auto, FMCG, power and energy, real estate, IT, pharmaceuticals and financial services. "...most of the respondents had presence on a pan-India basis and they expect GST to be a unifying fiscal legislation across the national market," the survey added.
The government plans to roll out the GST from April 1, next year. All central and state taxes like excise, VAT and service tax will be rolled into GST, once the new regime comes into effect.
The revenue from GST will be shared equally between the centre and states. The central government had last month proposed a three-rate structure for GST under which goods will attract 20 per cent levy, services 16 per cent and essential items a concessional 12 per cent.
The CII-KPMG study also found that 44 per cent of the executives felt that the GST could be an opportunity to consolidate their business operations as the proposed changes in the indirect tax structure would transform India into a national market. "...84 per cent of the survey respondents feel that GST would have a positive impact on the profitability of the business as there would be seamless flow of input tax credit with no or very limited cascading of taxes," CII-KPMG said.
The survey found that industry representatives feel any upward revision of service tax due to implementation of GST would have a "moderate to high" impact. "They (industry representatives) are realistic enough to know that the cumulative standard rate of GST may not be less than 14 to 16 per cent.
But nevertheless they would much prefer the tax to be collected at a single rate for both goods and services," it said. Close to 70 per cent of the survey respondents said it would take them 3-4 months in reconfiguring their IT systems to bring their business in tune with the proposed new tax regime.
