Tax is a much talked about topic in India which always confuses the layman. Recently, the Government of India passed the Goods and Services Tax (GST) constitution Amendment Bill with an aim to simplify taxes for the general public. The GST Tax reform can be clearly termed as a landmark and India’s biggest tax reform since independence. The bill is likely to streamline India’s fragmented tax system with a single levy. Also, the GST Bill is clearly good news for Indian businesses and B2B manufacturers in India. It will also give the SME sector the necessary boost.
GST is one indirect tax for the whole nation. The goal behind passing the bill is to create one single market. It will boost economic growth with optimistic estimates suggesting an added 2%. It is likely to make India as one unified common market. This means that only one single tax will be applied on the supply of goods and services, right from the manufacturer to the consumer. The credits of the input tax paid at each stage will be available at the subsequent stage of value addition. This makes GST a tax only on value addition at each stage. The final consumer of the goods and services will bear the GST charged by the last dealer in the supply chain.
The bill will have a positive impact on manufacturers in India, wholesalers, suppliers in India and allied industries. With the GST bill, there will be no distinction between goods and services. This will also help SMEs avail the complete tax incentives paid on procurement of all input goods or raw material as well as services from various sources such as import, inter-state purchases, and local purchases and services like power, telephone etc.
With the unified tax system being passed, the issues relating to regulatory uncertainty will also be resolved. Ecommerce shipment costs will reduce drastically resulting in business growth for organisations in this sector. The absence of multiple taxes such as VAT, excise, ST, CST etc. will enhance the ease of doing business for SMEs. They will also have a smooth and efficient inventory led model to operate.
Among all the sectors and industries, start-ups and SMEs have more of a reason to rejoice as this GST structure will provide higher exemptions to new business, businesses with turnover between Rupees 10 and 50 lakh will be taxed at lower rates. The GST will also ensure that there is reduction in logistics costs bringing great relief to manufacturing SME sector.
The sectors that will benefit maximum from GST are consumption (warehousing consolidation), logistics (more movement of heavy vehicles), house building materials (lower duties), and industrial manufacturing would likely experience a positive impact. The Oil & Gas sector is likely to experience a negative impact. Other sectors will experience a neutral impact.
However, as a whole, the impact of the GST bill on the economy is positive. The market can experience better days ahead.
With the passage of the GST bill, B2B manufacturer portals in India have a crucial role to play. B2B portals such as Pepagora.com have set a new paradigm of competitiveness in the business world. These B2B portals act as a bridge between buyers and sellers, importers and exporters, and offer them a common platform availing a bundle of some most useful services. The GST bill will further bridge the gap between buyers and sellers. The supply chain will look more unified.