22nd February 2017
Goods and Service Tax (GST) is all set to roll out on July 1st and the central government has taken effective measures to iron out all the glitches faced initially. Also known as the biggest tax reform in India since Independence this tax reformation is one of the most awaited change.
This reformation is welcomed as it promises to integrate and simplify the existence of indirect taxes and reinstate complex taxes such as State Value-Added Tax (VAT), Central Excise, Service Tax, Entry Tax or Octroi and other indirect taxes that posed as a hurdle to the progress of Indian economy.
The GST bill promises uniform taxation across the country while giving full tax credit from the procurement of capital goods. This in the later stage can be set off using GST output liability. This move brings the big enterprise, the corporate giants and the Small Medium Enterprises on the same ground by removing the tax differentiation.
The current tax system leaves room for major errors as it is levied on multiple stages thus leading to cascading effect of the tax payment. GST clears the multiple tax system makes the payment level uniform in order to ensure that tax burden is distributed. With the prevalence of the VAT manufactures had a major hole burnt in their pockets as they had to pay a lump sum amount in the name of tax which did not sustain the business in the longer run.
The current tax system which was introduced in the year 2005 came of very little help to fix the crisis in the country. Very little progress was achieved as its impact was deteriorated by the presence of multiple taxes levied by both state and central government.
GST enhances the SME’s in India
40% of the Indian exports is contributed by the MSME sector, this is perhaps just the beginning of its progress. With the recent reforms introduced this number is going to scale higher than ever before. 2016 has been a big year for the SME’s because of the Make in India initiative taken by the government. The importance of having a progressive SME sector has been realised and many RBI and government led initiatives have been introduced to promote the growth of this sector.
The SME Loan market is predicted to grow $3,020 billion in the next decade as per a recent credit Suisse report. This sector is already on road towards its progressive journey and is promising good scope for the existing and the upcoming SME players in India.
GST is set to change the way business is done by the SME’s.
With the introduction of GST this process will become uniform and uncomplicated to ease the operations of the business.
GST is set out to remove this clause that curbs the growth of the SME market as it will be balanced out with tax credit eventually propagating business across borders.
This is only made possible by cutting down on multiple taxes and unifying them as one.
Every new reform comes with its own pro and cons. GST though being much awaited by the nation is still being frowned upon by a few stakeholders of concerned sectors like banking. In perspective of the SME sector the growth looks promising when compared to the current system
GST simplifies tax, made provision for availing input credit, cross border / inter-state businesses made easy, and checked the cascading effect of taxation made it a single point tax.
These Pros have outshined the cons making GST the much awaited reformation that it is claiming to be.
To get more information about GST registration visit www. gst.registrationwala.com
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