As the day of GST implementation is inching closer, the business sectors across India are making preparations to enter this transformational phase with minimal hassles. Considering the amount of change these sectors would face in their regular tax structure, the Goods and Service Tax impact on the taxation policies of the country would indeed, be huge and revolutionary.
However, when we speak about the impact of GST on Small and Medium Enterprises (SMEs), it is believed that GST will have positive effect on SMEs. Let us find out the impacts of GST on SMEs:
There would be lesser bureaucracy interference due to online registration of business that would result in timely receipt of forms and documents. This would help make the entire cycle of registration simpler and easier.
GST is an online based platform having an electronic interface which would help curb compliance costs leading to increased transparency and avoidance of red tapism.
- Return Filing
All the returns shall be filed electronically which will help make adjustment of tax liabilities as well as input tax credit a hassle-free process unlike the current system where the hard copy of documents are transferred for the completion of process.
Electronic filing would enable a fast track process thereby enhancing the liquidity of SMEs. This means there would be fewer delays in receiving one’s refunds.
- Easier To Start Business
Presently, a businessman is burdened with varied taxes for multi-state operation under VAT registration. With the implementation of uniform tax policies under GST, the excessive complication of multi-state operation shall be standardised.
- Reduction of Tax Burden on New Business
The exemption limit under GST is Rs. 20 lakhs with relief to some of the traders and dealers unlike the present tax structure which demands for a VAT registration fee if the turnover is more than 5 lakhs.
- Reduced Logistical Overheads
According to Credit Rating Information and Services Limited (CRISIL), there would be a significant reduction in the cost of manufacture of bulk goods. This is so because no entry tax on manufacture and sale of goods would be charged across India. Consequently, delivery of goods at check posts shall be accelerated.
- Market Expansion
In the present scenario, goods from SMEs are taken up by big corporations since inter-state sales conducted by SMEs will burden them with added tax. But now with GST, input tax credit shall be done irrespective of the state of business and operation.
It is believed that tax neutrality and reduction in duties would help SMEs to boost their competitiveness. With these multiple impacts of GST, we can hope to see- the brighter side of GST implementation.