Impact of VAT and GST on Supply Chains of Garment Retail Sector

Abstract

(VAT! assessment process across the different states in India. This VAT system has been recently introduced and not yet implemented to its full impact. When fully implemented, it would have long lasting consequences on the way the supply chain is being developed. The current form of VAT encourages retail trade within a single state, with significant implications on the location of warehouse and accordingly transportation costs. The industry was eagerly awaiting an act from the government to simplify the Value Added Tax (VAT) assessment process across the different states in India. This VAT system has been recently introduced and not yet implemented to its full impact. When fully implemented, it would have long lasting consequences on the way the supply chain is being developed. The current form of VAT encourages retail trade within a single state, with significant implications on the location of warehouse and accordingly transportation costs. The implementation of Goods and Service Tax (GST) will be a major milestone for the Indian Tax System, which will bring about changes in the way manufacturing, warehousing and distribution is carried out in India. Organizations must restructure their supply chain strategy to overlook tax boundaries and will be able to position their warehouses and distribution networks, more focused on cost and time. To stay competitive, companies should be ready with their new supply chain strategy post GST - with details of an optimal network structure and the steps that needs to be taken to get there. The implementation of Goods and Service Tax (GST) will be a major milestone for the Indian Tax System, which will bring about changes in the way manufacturing, warehousing and distribution is carried out in India. Organizations must restructure their supply chain strategy to overlook tax boundaries and will be able to position their warehouses and distribution networks, more focused on cost and time. To stay competitive, companies should be ready with their new supply chain strategy post GST - with details of an optimal network structure and the steps that needs to be taken to get there. This research paper will analyse the impact of VAT and GST on Supply Chains of Garment Retail Sector.