GST won't have major impact on air passenger growth: Icra
- Author: Zachary Reyes May 27, 2017,
May 27, 2017, 12:17
"As per some estimates, this additional Input Tax Credit would be as much as 2% of the turnover of the telecom industry".
"After GST regime, telecom companies would be required to re-work their costing and credits' availability and rejig their prices and ensure that the increased availability of credit is passed on to the customers by lowering their costs", the ministry said in a statement here.
The present incidence of taxes on sugar is 8 per cent while the proposed GST rate on sugar is only 5 per cent, i.e., lower by 3 per cent. In case of loss of revenue under the GST, the State will be compensated by the Government of India from the fund created under the Goods and Services Tax (Compensation to States) Act, 2017, Lalsawta informed the Assembly.
GST, touted as the single biggest tax reform since India's independence in 1947, will eliminate the various central and state taxes that are levied on products and services now bringing India under a single tax regime.
"With airlines generating a major portion of their revenues from economy class, disallowance of input tax credit on inputs (excluding services) for economy class will result in an additional cost to them", said ICRA AVP and Co-Head, Corporate Sector Ratings, Kinjal Shah. Resultantly, the balance two-third credit of the previous year would be admissible in the Current Financial Year itself.
Such multiple incentives, it said, would hugely benefit telecom companies, in that, their liabilities to pay GST through cash would stand reduced to about 87% of what they paid last fiscal.
The decision is in line with the government's decision to push more people to use public transport, as the GST Council has already fixed zero percent service tax on intra-city travel which will help metro, city bus, suburban rail as well as tram, monorail, and waterway routes.