GST will boost sales, 5 percent growth expected by 2020, says Retailers Association of India
Indian retailers are upbeat that the GST will have long term benefits for the industry and are expecting the new tax system to boost sales and generate a growth of 5 percent over the next three years, according to the Retailers Association of India (RAI).
Majority of the Indian retailers are expected to suffer losses in the second quarter due to the implementation of GST as growth slowed down in the month of July due to the uncertainty over prices. However, post GST the sales have picked up in the month of August and retailers are optimistic that GST will be beneficial in the long run.
"GST could increase the overall cost benefit of retailers by up to 5 per cent over three years," Kumar Rajagopalan, chief executive officer of RAI, was quoted by a news agency PTI.
"The single window tax will increase the ability to grow sales. Besides, any item can be shipped to any part of the country without the cascading impact of tax. This will in turn ensure availability of items to customers," he added.
Leading retailers like Arvind Ltd and Spencer retail also expressed their views on the same and have said that post the successful transition to GST regime things are looking positive for the industry.
"Transition to GST for us has been good. We have held workshops to create awareness among suppliers and manufacturers. We didn't have any disturbances with our business continuity," S Kannan, chief financial officer of Arvind Lifestyle Brands, said.
Kannan said retailers can avail of input credits with the effective GST tax rate that factors in all benefits. There is up to 25 per cent increase in logistics and delivery lead time.
"Over a period of time, factoring in input tax credit there could be a 1-2 per cent benefit to the cost base," he indicated.
"GST will bring good cost savings impact to retail companies. Through input tax credit alone there could be 100- 200 basis points benefit for retail companies over the next year or so, said Arvind Vats of Spencer Retail.
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