Global leader in credit ratings and research, Fitch Ratings has said in its latest special report on the newly rolled-out Goods and Services Tax (GST) that the tax regime is probable to have a negative impact on the SME sector.
“India’s new Goods and Services Tax (GST) is likely to have a beneficial impact on India’s auto, cement and organised retail sectors, but a negative impact on the oil & gas, traditional retail and SME sectors,” articulated the report.
In its report, ‘Varying Impacts of India’s GST Across Corporate Sectors’, the agency has cautioned that implementation risks will remain over the next 12 months due to the complexities of adopting the new system amid a culture of poor compliance, particularly among the traditional retail and SME sectors.
India's GST Negative for Some Sectors, but No Rating Changeshttps://t.co/ZqwtZp3OvG pic.twitter.com/M0lSf1FleH
— Fitch Ratings (@FitchRatings) July 18, 2017
On the other hand, the agency views the impact as broadly neutral for the property, electricity, telecoms, pharmaceutical and fertilizer sectors.
The agency though assured no changes in the ratings of the corporate rated internationally by Fitch, despite the negative impacts over certain sectors.
GST came into effect from July 1, 2017 to replace various Central and State taxes, earlier involved indirectly, with a single taxation system.
