After a lot of consideration and speculation, the biggest indirect tax reform in India is about to enter the Indian market. When everyone's eyes are flashing for GST Bill, it's the primary growth driver sector that is trapped in a state of flux.
Small and Medium enterprises are the backbone of the Indian Economy reaching up to 3 billion and catering employment services to the masses. Driven by a wide-ranging skepticism, several startups and SMEs are wary of the adverse impacts that may come into the spotlight with the GST fill-in.
Handful assumptions are that the GST regime will benefit SMEs the most. However, market optimism aside, they are not very sure of the ways the new tax regime will affect their business and alter their bottom line.
With GST, All the procedures counting – Registration, Payments, Refunds, and Returns will now be carried out through online portals only and thus SMEs need not worry about interacting with department officers to carry out these compliances, which are considered a headache in the current tax regime.
Tax neutrality will be a main challenge as under the existing excise tax, no duty is paid by a manufacturer having a turnover of less than rupees 1.50 crores. But, post GST implementation; the exemption limit will get significantly lowered.
As a result, a large number of SMEs and startups will be mandated to come under the tax net and will have to pay a large chunk of their earnings towards tax.
SMEs now would witness a face to face competition from large enterprises. Undeniably, GST's impact on SMEs across various industries will vary greatly. It is quite natural for pervasive, country-wide tax reform, as GST is, to have a mixed opinion. The whole nation awaits the final rollout.