Opportunity
Saturday , 29 April 2017
Home » Cover Story » Demonetization & GST Cascading effect on the Cleaning Business

Demonetization & GST Cascading effect on the Cleaning Business

The cleaning industry in India too has been weathering the aftermath of demonetization and the proposed Goods & Services Tax (GST) introduced in the last quarter of 2016. So much so that the impact of both demonetization and GST is evoking diverse connotations from those engaged in the cleaning business. Mohana M gauges the impact of these two most-talked about policies on the business of cleaning.

What began as a casual talk with the cleaning fraternity at Delhi, turned into a healthy debate on whether demonetization and GST will benefit the cleaning industry, will it have any impact at all or will it knowingly or unknowingly further squeeze the pockets of the cleaning magnates.

The initial lull experienced in the cleaning business following demonetization is actually picking up now, restoring the confidence for some and at the same time clouding the conviction of others.

While, the move to demonetize and introduce GST is the best of the moves that will make way to reduce the corruption in the cleaning business, it is not the same across the board.

As Deepak Baluja, MD-Final Technologies, asserted that a daily wages labourer who is working to get his Rs.400 at the end of the day would not work if he is offered a cheque at the end of the day. “Agreed that there is Jan Dhan, ATM… and so on but how are we going to convince these daily wage workers who live on what they receive daily. My business is floor polishing and the labourers engaged are prepared to work only on daily wages.”

Of course, the floor polishing segment has found another source of doing their business without daily wage labourers to sustain themselves; but would this mean that those labourers who were earning an income through a job they did best, have been forced to look out for another means, because of demonetization?

Similarly, service providers who will be subjected to GST will also being customs on procuring the cleaning machine? While some agree that Customs should not be levied on cleaning products, especially when cleaning is on the national agenda, others are concerned that lifting customs will adversely affect the Make in India concept.

‘Will set a perfect business scenario’

“In my opinion, demonetization has helped the business model. Whichever means would help bring in

a] transparency
b] monitorable accountability and
c] contribute to upgrading the dignity of labour.

This should be welcomed by the industry, as it will help the segment to go closer to being an industry and be more organised.

Demonetisation has helped reduce the cash transactions and has ensured to add opening of bank accounts or paying directly through cards. The greater impact would also be with the manpower to feel the need for the same and not get distracted by the lure of cash.

As such, there are no hardships of the cleaning industry – at least not more than any other industry would or must be facing. Today, we see more and more customers valuing the means of wage distribution and the demand for maintaining the statutory demands. These are sure to translate to adding value to their premises and socially uplift the people engaged in the trade.

The increase of wage limits, opening of UAN, online access to PF and ESIC, all this is probably going to lead to the unskilled employee getting nearer to the tax paying bracket. In the long run, this would enhance their social status, behaviour, outlook to life and to work as well. There is a reason why the developed countries have respect for the janitorial staff and the value assigned to their work. We, as a country, are progressing in the direction and must embrace and encourage the movement.

Speaking of GST, if we broadly categorise the cleaning products, then, majorly it is the cleaning machines that are imported to a large extent. The other supplies such as chemicals and consumables, are predominantly manufactured in the country. The customs duty, according to me, is trying to protect domestic players against dumping by the international parties and the CVD (counter veiling duty) is levied in place of excise duty. This means, largely it is the cleaning machines that are subjected to the duties and more often than not, these are amortised over a period. Even if both the duty and tax are waived, it would still make a difference of probably less than 1-2% on the contract value. Having said that, it is not to discount the fact that if done, it would make the products available at a cheaper rate.

The procedures for the registration to the GST are well defined. The business would probably need to seek assistance from consultants in the field to do it smoothly. The intricacies of the business would need to be understood by the personnel executing the task for better accuracy of the process.

However, the nature of the industry is demanding either/ and of the VAT and service tax. This necessitates double the task of payment, filing returns, assessment, etc. With the GST, we should look forward to the job being made simpler – single line. This would mean less hassles and more productivity.”

Vinay R Deshmukh
COO, Forbes Facility Services Pvt. Ltd

What began as a casual talk with the cleaning fraternity at Delhi, turned into a healthy debate on whether demonetization and GST will benefit the cleaning industry, will it have any…

Review Overview

User Rating: Be the first one !
0
Print this page

Leave a Reply

Your email address will not be published. Required fields are marked *

*