The much awaited biggest and boldest tax reform is set to be rolled out from 1st July 2017. The government has proposed a four slab structure, while the exhaustive list of goods that need to be taxed is in the process of finalisation.
GST is another bold step that fortifies the Ease of Doing Business in India. The Startup & MSME ecosystem will not only hugely benefit from a single window indirect tax compliance but will also see large companies working with them.
Ease of Business : Presently, multiple indirect taxes to manage is a huge inconvenience and also limits a startup to expand its business in various states. Thanks to VAT, Octroi, etc compliance & rules to follow in each state. GST eases out the pressure of knocking on multiple doors and comply with a single window uniform tax applicable across the country. A centralised registration will allow a business to work across cities. Set off on Service tax, which is currently not available, will be possible from July 1st. Startups paying taxes for the goods and services received will be able to set off with the taxes for goods & services rendered.
Transparency & Compliance: Startups & MSMEs are stressed out with very tedious processes & documentations. GST will an easier and single window taxation process. Compliance will increase with returns will be filed 3 times a month as compared to the current once in six months. Digital India will see a boost, with technology startups building softwares to keep other startups abreast with being tax compliant.
Performance & Credit : A transparent & compliant book of accounts will not only help assess performance but also open up avenues for credit. Digitisation will play a major role and help start ups focus on making and receiving payments only through digital medium and avoid cash transactions.
Overall, GST will bring about a radical change in the process of conducting businesses. Startups will be able to streamline, follow discipline, use technology and expand organically in the bargain.
Manufacturing units may have to pay duty on 25 lakhs as compared to current 1.5 crore, however it is keeping in mind, most Startups are solutions or services providers
A clean economy will open up avenues and gradually see every level of business benefiting from the financial sector. Companies may now look upon India for the ease of business it offers. FDI’s too may see a rise. Larger corporations & International companies my ease off their load by outsourcing to smaller companies, catapulting and contributing to the SME Startup growth story.
Overall, we will have a transparent, business friendly and growth oriented ecosystem being built for entrepreneurs which in turn will embolden policy makers to continue revisiting such reforms from time to time that will help GDP growth. Over a period of 2 years India could possible grow economically stronger and cost of living reducing.
(Opinion piece by Prashant Rao, Managing Director/Business Head at D-Ammo Imagineering)
Source: BW Disrupt
