It is now not the targeted April 1, 2017, but most likely July 1, 2017, when the GST (Goods and Services Tax) is expected to bring the long-awaited relief to the Indian economic area.

The reasons for the delay in the last few months are certainly numerous and, on the surface, probably primarily politically motivated. Because it's about a lot of power and a lot of resources. How much will individual states be willing to give up for the good of the nation? Official apparatuses, opportunities for influence and everything else that one might not even be able to imagine but can do depends on this question.

What the GST India postponement means for you

So you now have three months longer to prepare for this new VAT system “GST”. This will not only give you a little more breathing room, but also the rest of the Indian economy.
Don't be impressed by fear scenarios that are already doing the rounds: “You have one foot in prison if you do something wrong…”

Because you are in absolutely the same position as all other Indian businesses who are still groping in the dark. However, if you show good will and willingness, you are already miles ahead of most companies. No tricks but common sense are required here. Coordinate with the tax authorities, pay the tax if in doubt and protect yourself contractually. Then no one will harass you or “blacklist” you.

Where do we currently stand with “GST India”

At least the introduction of the Goods & Services Tax is a wonderful opportunity to examine the cost structure with your Indian partner in a well-prepared, friendly and sensitive manner. In this way, you get the long-awaited transparency and may even identify costs that are not and may never have been costs.

For classic Sales organizations The import costs could be significantly reduced by the previous CVD (countervailing duty, e.g. 12,5%). (Note: Anyone who did not want to disclose their import prices previously had to bear the CVD as a cost). This makes pure imports to India more attractive. Although this contradicts the ambitions of the “Make in India” campaign, it is in line with standard international practice.

Services (e.g. in after sales, warranty, supervision) could also have a positive benefit from GST through improved billing options.

Indian companies that only work for the Export produce, should not pay any indirect taxes on their input today and it should stay that way.

The completely normal European one Machines and (turnkey) plant manufacturers will probably continue to separate its contracts (contract splitting) and then pay close attention to the processing. You should now be particularly careful with contractual guarantees for input tax credits. The risks associated with direct taxes (e.g Premises risk) remain in place.

These are the author's personal views Burkhard Wiegert