New Delhi, Delhi, India
The GST tax reform can clearly be termed as a landmark and India’s biggest tax reform since independence with the aim to streamline India’s fragmented tax system with a single levy. The passing of the GST bill is clearly good news for Indian businesses and will provide a huge fillip to the SME sector.
With a goal to create one single market, the GST bill will boost economic growth with some optimistic estimates suggesting an added 2%. The GST regime will bring uniformity in the market creating a consolidated national-market-space. The distinction between goods and services will not apply, thereby, ensuring ease in tax compliances by ensuring one unified tax levy. This will also help SMEs avail the complete tax incentives paid on procurement of all input goods as well as services from various sources such as import, inter-state purchases, and local purchases and services like power, telephone etc. With the unified taxation system proposed, issues relating to regulatory uncertainty will be resolved and shipment costs will reduce resulting in business growth for the organizations in this sector. In the absence of multiple taxes such as; VAT, Excise, ST, CST, the SMEs will have a smoother and efficient inventory led model to operate, which will greatly enhance the ease of doing business. This tax system has been applied by most of the developed countries, as it helps protect businesses against multiple taxations.
The start-ups and SMEs have more reason to rejoice as this GST structure will provide higher exemptions to new business, businesses with turnover between Rs 10 and 50 lakh will be taxed at lower rates. The GST will also ensure that there is a reduction in logistics costs bringing great relief to manufacturing SME sector.