On July 1, 2017, 17 different taxes were subsumed into the GST. The notion of one nation, one tax took over and a number of experts called it the greatest economic reform ever. A lot of economist saw great possibilities in the implementation of the GST and some did not like it as much as others did. However, it has been more than 600 days since the introduction of the GST and it seems to be a good time to take a close look at how it has impacted the Indian market.
We really have a national market now, thanks to GST
The tax paid on the purchase of a particular item in Kanyakumari is equal to the tax paid in Jammu and Kashmir for the same article. Since we are talking about the seventh largest country of the world, creating an integrated market devoid of discrepancies is a remarkable feat. The indirect tax system has shed a lot of unnecessary complexities post GST.
Running a business in India has never been easier
This has multiple layers of reasoning behind it. Let us try to understand the impacts of the GST on businesses.
Firstly, enterprisers no longer need to think about setting up their business in areas with lower tax rates. Thanks to GST the interstate borders matter no more. You have literally one less thing to take into consideration while choosing a spot for your office or warehouse.
Secondly, since the launching of online e-way bills in the June or 2018 it has become way easier to move your goods from one part of the country to another. Your trucks need not stop to pay a different tax at each check post; there is less chance of a raid by the state government which in turn save you a lot of time.
A recent survey involving 50 transport companies has conveyed that the turnaround time of trucks has reduced by 18-20% since the introduction of the GST as well as the e-way bills.
Thirdly, filing your tax returns is easier now owing to the digitization of the whole process. It is no longer necessary to spend thousands on a professional. Your data lives in the GST portal so you need not even keep copies of the tax documents.
Fourthly, GST has cancelled the possibility of cascading of taxes; which means you no longer have to pay tax on tax.
Mixed results for the MSME sector
This is the sector that really drives Indian economy but its working capital took a blow after the introduction of the GST. However, with a strong IT infrastructure the MSME sector can really benefit from the changes. It is easier for them to expand the market now owing to the introduction of e-way bills.
How do the numbers look?
In the first nine months of the GST regime the revenue has been nearly Rs 8.2lakh crores which sums up to Rs 11lakh crores for 12 months. The revenue growth has been nearly 11.9%. While these developments are quite encouraging there have been some glitches too. A lot of enterprises are struggling with compliance owing to infrastructural failure.
The government has already started taking steps towards better technological efficiency and easier compliance – we can hope for the best.