By Hello Mumbai Team (Aleem Shaikh)
The Budget 2017-2018 focussing on ‘Transform, Energise and Clean’ India has some immediate-term as well as long-term impact on business in general, and retail in particular.This budget, along with the Finance Minister’s conviction of GST implementation on scheduled date, is music to the ears of retailers. Overall, the budget laid emphasis on digitization, infrastructure, and support to farmers, low-cost housing and ease of doing business.
Some key implications of the budget for retail are as under:
1. Pro-consumption: More Money in the hands of people
a. The large thrust on infrastructure development will generate employment, increasing the number of people with purchasing power.
b. The reduction of the tax rate from 10% to 5% for 2.5 lakh to 5 lakh bracket will create a disposable income of Rs12, 500 per annum in the hands of individuals.
2. Ease of doing business: Will help accelerate modern retail
a. APMC Amendment for direct sourcing of perishables from farmers and contract farming in favor of retailers on various counts, the benefits of which will be passed on to the ultimate consumer.
b. Emphasis on adoption of Model Shops and Establishment Act. The Act seeks to allow shops, malls, and other retail establishments to operate throughout the year with flexibility to open and close at their convenience. In addition, it provides for women to be employed in night shifts with adequate security.
c. Phasing out of Foreign Investment Promotion Board (FIPB) can accelerate FDI funding in the sector as approvals will be faster.
3. Ease in taxation: Reduced burden on small retailers
a. Small traders having a turnover of less than Rs 2 crore can avail presumptive tax benefit under sections 44AD and pay 6% of turnover as against 8% earlier.
b. The effective tax impact on retail companies having a turnover of less than Rs 50 crore has been reduced from 30% to 25%. The reduction of 5% is a great relief for small retailers.
c. Extension of Minimum Alternate Tax (MAT) Credit utilization from 10 years to 15 years will help retail businesses as they have long gestation period.
4. Accelerated Manpower fulfillment: Increased Skilled workforce
a. The increased emphasis on skill development through the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) will help infusion of skilled manpower into modern retail, good news for retailers on an expansion spree into non-metros.
Speaking about the budget, Kumar Rajagopalan, CEO, Retailers Association of India said, “The finance minister has kept something for everyone in the budget, with major emphasis on accountability and transparency. We have already witnessed a big tilt towards modern retail post demonetization and the measures proposed in the Budget will further accelerate the pace. We await implementation of GST to further the cause of chain store and omnichannel retail in the country.”