Implementation of GST Will Create Jobs and Promote Increase in Hiring by 11% in India

November 29, 20168:08 am953 views

The implementation of GST (Goods and Service Tax) will not only have a positive impact on the ease of doing business; it will propel formal job creation states TeamLease GST Bill and Jobs Report. As per the study, adoption of GST will lead to an 11% growth in hiring across sectors. Further, from a region perspective though marginally South India will top the job generation chart.

The GST regime will result in double digit job creation across sectors. The sectors indicating job creation post GST-implementation are Automobiles, Logistics, Home Décor, Ecommerce, Media and Entertainment, and Cement with 11 percent to 18 percent increase in jobs per year, IT and ITeS and BFSI between 10 percent and 12.5 percent, consumer durables, pharmaceuticals and telecommunications between 10 percent and 13 percent.

Ecommerce and Logistics create jobs fastest, with increase in demand, scale and profitability. Temporary hiring is set to receive a big boost during the GST regime. All sectors, except Cement and IT/ ITeS, are likely to create significant number of temporary jobs. Blue collar and front end sales roles are likely to be the main beneficiaries of this trend.

The GST has elements that mostly create jobs, but may also result in job loss in three sectors. The three sectors that is likely to witness loss of jobs the predominant reason being increase in prices due to GST. Increased tax compliance and formalization are the catalysts of GST success. Tax rationalization and a wider tax base are estimated to increase tax revenue mobilization by 47 percent to 82 percent. The network effect of informal businesses pushed to formalize is instrumental in creating formal jobs.

See: 60% Employees in India Plan to Quit Jobs Soon

Place of Supply and Point of Taxation ambiguities need to be resolved to ensure wider success for job creation. Exemptions and Interstate taxation serve to delay the gratification for some sectors, thus adversely affecting job creation. According to the report, except for consumer durables, pharmaceuticals and telecommunication, most other sectors will create jobs in double digits.

Elaborating on the report, Rituparna Chakraborty, Executive Vice President & Co-Founder, TeamLease Services said, “The uniformity and the reduction in the average tax burden offered by GST will provide a great impetus to employment creation. The predictability of cost of products manufactured or services rendered across the country will improve enterprise productivity. It will also trigger expansion of services, capacity and product ranges, resulting in a subsequent increase in manpower requirement. While all sectors stand to gain from the positive move, the biggest gainer will be labour intensive sectors leading to a substantial raise in formal job creation.”

A detailed analysis on the impact of GST on the economy, as per the study, GST will boost the revenue of the exchequers as well. The revenue collection from general sales tax will grow from the current 6.3 percent to 11.49 percent.  Service tax, central excise and customs will also witness growth leading to greater funding towards workforce welfare and sustained job creation initiatives.

TeamLease GST Bill and Jobs Report is a comprehensive study aimed at understanding the impact of the new single tax system (GST) on job creation.  The study covers 11 key industry verticals namely FMCG, Automobile, BFSI, Telecommunication, Pharma, IT / ITes, E-commerce, Logistics, Media and Entertainment and Cement across the country.

Also read: 84% Indian Employees Optimistic about Great Career Prospects in 2017

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