By Amarpal Chadha, Ernst and Young
Even after numerous malls mushrooming up, increased visibility, according to the Assocham Financial Pulse (AFP) Study titled "Prospects in Indian Retail Sector" (December 2009), organized retail currently accounts for nearly 5 per cent of the retail market. In order to usher an era of real growth in organised retail, the retail sector needs some impetus from the Government. It has been a long standing demand to award retail an industry status, which will help in over-all development of the sector. Finalisation of the GST rollout is also keenly awaited by the retail sector and retailers are in the process of gearing themselves to reap the benefits of the new tax regime.
Refund of Special Additional Duty of Customs (SAD) allowed to importers on goods meant for resale in India is posing a lot of administrative difficulty for the tax payers. The Government should either exempt goods imported for resale trade from the procedure for SAD refund or simplify the procedure associated with the refund claim. This would help tax payers reap the intended benefit as envisaged by the Government. Assocham in its pre-budget memorandum for 2010-11 has also recommended that the provisions may be made to exempt branded goods imported for retail trade from SAD.
Abolition of Service tax on renting of immovable property is still a live issue and should be taken up on priority basis as the same increases the cost of retail operations and consequently, squeezes the retail margins. As Foreign Direct Investment (FDI) in multi brand retail is not permitted in India, franchise model is being seen as the next big thing. There are many countries, which have comprehensive legislations around franchising. To ensure that the franchise model helps in overall development of the retail sector in India, it is time that legislation is put in place, which ensures that the rights of both the franchisors and franchisees are adequately guarded.
It is time for the Government to give clarity on applicability of Press notes 2, 3 and 4 of 2009 for retail sector, which deals with calculation of FDI in step down subsidiary of an Indian Investing company having FDI. In the last budget the Government came up with tax sops for assessees engaged in setting up and operating a cold chain facility. This was a positive move towards giving a boost to the supply chain management in India. The industry is expecting, if tax sops in relation to carry forward and set off of accumulated losses can also be extended for consolidation in retail sector, it would go a long way in boosting the growth of retail industry.
Refund of Special Additional Duty of Customs (SAD) allowed to importers on goods meant for resale in India is posing a lot of administrative difficulty for the tax payers. The Government should either exempt goods imported for resale trade from the procedure for SAD refund or simplify the procedure associated with the refund claim. This would help tax payers reap the intended benefit as envisaged by the Government. Assocham in its pre-budget memorandum for 2010-11 has also recommended that the provisions may be made to exempt branded goods imported for retail trade from SAD.
Abolition of Service tax on renting of immovable property is still a live issue and should be taken up on priority basis as the same increases the cost of retail operations and consequently, squeezes the retail margins. As Foreign Direct Investment (FDI) in multi brand retail is not permitted in India, franchise model is being seen as the next big thing. There are many countries, which have comprehensive legislations around franchising. To ensure that the franchise model helps in overall development of the retail sector in India, it is time that legislation is put in place, which ensures that the rights of both the franchisors and franchisees are adequately guarded.
It is time for the Government to give clarity on applicability of Press notes 2, 3 and 4 of 2009 for retail sector, which deals with calculation of FDI in step down subsidiary of an Indian Investing company having FDI. In the last budget the Government came up with tax sops for assessees engaged in setting up and operating a cold chain facility. This was a positive move towards giving a boost to the supply chain management in India. The industry is expecting, if tax sops in relation to carry forward and set off of accumulated losses can also be extended for consolidation in retail sector, it would go a long way in boosting the growth of retail industry.
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