GST is a comprehensive tax on the supply of goods and services across India and is expected to act as a catalyst for the transformation of business across all sectors.
A trader would be eligible to avail credit of the GST payable on their domestic procurements of both goods and services required for operation of business, unlike the present indirect tax regime.
Accordingly, a trading business is expected to gain significantly in terms of input tax credits on their operating expenses thus leading to a marked decrease in their operating costs. For instance, in the consumer business sector, advertising and branding comprise a significant proportion of the business promotion expenses.
GST, being a common tax on goods and services, would be available as a credit to these businesses on all such expenses and thus have a positive impact on their bottom line.
In respect of imported goods, the landed cost is expected to decrease significantly in light of the fact that certain import duties which are an inherent part of the cost of acquisition would no longer be so. Therefore, while the customers would seem to be apparent beneficiaries, on the other hand the topline of the trading businesses could also see a decreasing trend, at least initially.
However, with reduced prices, consumption could also get a boost and thus ultimately bring in cheers for the trading business with increased sales.