GST was implemented about 2 months before and the prime aim of implementation of new tax regime is one nation, one tax and of course one market. Goods And Services Tax has replaced plenty of central and state levies for example VAT, service tax, and excise. GST has impacted almost everyone, but in this post, we are going to focus on Impact of GST on Small and Medium Enterprises.
Small & Medium Enterprises
In this new tax regime the combining of Central (CGST) and state (SGST) taxes, businesses who annual turnover of Rs 20 lakh or above (10 lakhs in some specific states) will have to follow all the GST provisions. Additionally, the new GST rule will adversely influence the Small & Medium Enterprise’s working capital. The exemption limit for SMEs was Rs. 5 lakhs under the previous tax regime, whereas in the new tax regime the exemption limit is increased to Rs. 20 lakhs ( 10 lakhs in some particular states) which have a great positive impact.
Positive Impact of GST on SMEs
SMEs will be affected the most by the rollout of the GSTas well as the impact will be favorable in many ways.
Ease Of Starting A Business
You have business having operations across the various state then it needs VAT registration. Various tax rules in different states add to the complications and get high procedural fees only. GST lets a centralized registration that will make starting a business easier and an added advantage for SMEs is the consequent expansion.
Better Logistics And Faster Delivery Of ServicesNo entry tax will be charged under the GST bill, for goods manufactured or sold in any part of India. That means delivery of goods at interstate points, as well as toll check posts, will be expedited.
Tax Burden Reduced On New BusinessBusinesses with a turnover of more than 5 lakh need to pay a VAT registration fee as per the current tax structure. The government mulls the exemption limit under GST to 25 lakh providing relief to over 60 percent of small dealers and traders.
Undisputedly, GST impact on SMEs across various industries will vary greatly. SMEs will be more competitive with a level playing field between big enterprises and them. Also, SMEs would be able to compete with overseas competition coming from cheap cost centers kine China.