From kids to king size corporates, the entire nation is well informed about the famous GST (Goods & Services) bill and its major socio-economic benefits by now. But if you are a small or medium size business (SME), you need to know more than just this, since GST can be a secret weapon for you. Here’s all the reasons for you to rejoice, since now GST has finally been green-lighted in the parliament yesterday, 3rd August’16.
- Taxes at low rates: With the implementation of GST, businesses with turnover between Rs.10 and 50 lakh will have to pay taxes at lower rates. Small and medium business will get huge respite from tax burdens in this way.
- Significant reduction in logistics cost and time: A lot of times, transport vehicles get delayed during movement across States due to small border tax, check post issues etc. Interstate movement will become cost and time effective, as these taxes will be eliminated. This will also bring down costs associated with maintaining high stocks since there will be free movement of goods.
- Bringing the small and medium businesses on the same platform as big businesses: The proposed regime places the small and medium businesses on the same footing as large-scale industries by removing such tax differentiation. GST will levy tax on stock transfers and by neutralising the cascading impact of input taxes through the input credit mechanism available under the GST regime.
- Increased reach to the potential customers: At present, the ability of small and medium businesses to reach to their potential customers across India is largely restricted, due to the Central Sales Tax (CST) on sales between states. This, in turn, increases the purchase cost of such products for the customers. SMEs will be able to get rid of this problem with the rolling out the GST.
- High Competitiveness: With the implementation of GST, a business-friendly environment for small and medium businesses will be built which in turn will make them more cost-effective and competitive in the days to come.
Therefore, GST has a lot in the box for the small and medium businesses and might benefit them significantly in the long run. So, SMEs, Congratulations!
Stay tuned for our next Newsletter for an in-depth analysis of GST and its effects on SMEs.
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