Implementing GST will be a challenge: MS Unnikrishnan, MD & CEO, Thermax

GST will not be easy to implement, MS Unnikrishnan, MD & CEO, Thermax, told ET Now.

Edited Excerpts:

How will life change for you under GST?


18% is what the committee has chosen for capital goods and industrial products. Its impact will vary from state to state. The incidence of tax is going to go up because currently we pay 12.3-12.4% excise duty on service tax. Then interstate sales tax of 2% with total incidence on tax applicable to capital goods for sales is approximately 14.5%; it is going to increase to 18%.

The incidence of tax approximately is 28% that will come down to 18% but there is only a smaller portion of the total pie so overall it is going to be having a negative impact on the capital goods industry. Ultimately part of the money will be absorbed by the company, part to be passed to the market and it will get settled may be within a six months to one year period of time.

Do you think GST in the short term is not going to create demand; instead it will only add to chaos?

Certainly it is going to be a challenge because the states are demanding local registrations for local sales tax. It is going to complicate for smaller companies. Larger companies have the muscle power to do that but the medium scale companies will grapple for sometime but everything will get settle down. It is going to be a difficult time for the industry, manufacturers and even for the government. But you got to pass through that for a good thing to happen in the future.