‘GST regime can benefit auto sector’

CHENNAI: Economic reforms can push India’s GDP growth to 12 per cent from the current 8 per cent, said Venu Srinivasan, Immediate Past President, Confederation of Indian Industry (CII) and Managing Director, Sundaram Clayton Limited, at a seminar on ‘Goods and Services Tax’ organised by the CII in coordination with KPMG here.

“With the right kind of reforms, the growth rate can be raised to the level of 12 per cent, at least one per cent each coming from manufacturing, agriculture, export and infrastructure sectors,”  he said.

“Reform is very important for generating 20 million new jobs every year,” he said and added that the services sector and the manufacturing sector could comlpement the task on that count.

Venu Srinivasan said that the proposed goods and services tax (GST), which would come into effect from April 1, 2011, could benefit the small and medium sector in a way, besides the automobile  sector, all for stimulating the nation’s economic growth.

“GST and the Direct Taxes Code (DTC) are the two major economic reforms that are to be unfolded in the coming months. Both could have significant impact on business. These path-breaking reforms should make India more competitive, especially in manufacturing sector. China, the country with which India has to compete in the world market, is 15-20 per cent more competitive than India,” he said.

Venu Srinivasan also released the CII-KPMG survey report on the proposed GST regime at the seminar.

T Kannan, chairman, Trade, Taxation & Globalisation, Sub-Committee, CII Southern Region and Managing Director, Thiagarajar Mills, said GST was the latest among the major reform proposals of the Government for improved tax collection and reduction in fiscal deficit.

“GST is an economic reform rather than a tax reform. All reforms have changed completely the way business is done and there are absolutely eminent tools for a global link-up,” said Uday Ved, Executive Director and National Head of Tax,  KPMG.

Sachin Menon, Executive Director & Head of Indirect Tax, KPMG, said, “GST is the mother of all fiscal reforms. It will open the era of unified Indian market and there are lots of expectations on that count.”

Making a presentation on ‘Overview of GST’,  he said it will change the present origin-based tax system to a destination-based one. The present tax system was more to the advantage of the manufacturing States than the consuming States which could not get the fruits of the taxes paid by its people.