Many are already calling it to be the biggest tax reform since the inception of India. The GST might be the pandora’s box for the country; nobody knows the exact effect of the bill. While it brings with itself the promise of a much more integrated economy, the GST will have certain specific effects on a number of industries functioning in the country. The tax payers will pay one consolidated tax instead of the plethora of taxes including State Value-Added Tax (VAT), Central Excise, Service Tax, Entry Tax or Octroi and a few other indirect taxes.
“The challenges faced due to a complicated tax system on business transactions has been debated for a long time,” said R Narayan, Founder and CEO, Power 2SME. This tax will be levied on manufacture, sale and consumption of goods as well as services at the Central and State government levels. “The distinction between Goods and Services will be reduced gradually, thereby making tax compliances easier,” he added. Most of the developed countries use this form of taxation for ease and convenience and to avoid double taxation.
GST would be payable on price actually paid or payable, termed as “transaction value”, which will include packing cost, commission, and all other expenses incurred for sales. A good point in this tax is that it will be payable at the final point of the consumption.
Small businesses can feel GST’s positive effect in the following ways:
- Ease of starting business
- Higher exemptions to new businesses
- Simple taxation
- Respite for businesses in both sales and services
- Reduction in logistics cost and time across States