Impact of GST on Small and Medium Size of Business

With GST discharged on first July 2017, everybody has been theorizing about the duty a considerable

measure and about the time it will be executed. However all things considered, the inquiry that is

upsetting a few SMEs is whether their business/ERP programming is prepared for GST and their

bookkeeping framework has capacity to deal with GST adequately. GST (Goods and Services Tax) is

without a doubt a standout amongst the most indispensable expense changes to be passed by the

Government of India. Under the present duty administration, there are a few duties forced at

different stages which are borne by the makers and in the end the customers. With GST all the multi-

level tax collection gets wiped out and a solitary expense is forced which is very simpler and easy to

get it.

The organizations in India, particularly the Indian Manufacturing division is set to profit by this

solitary tax collection module as the area will turn out to be more focused and will spare both time

and cash. With GST set up, different charges, for example, Excise, VAT, Octroi, Service impose are

probably going to go out. The GST will take a shot at an equation which will separate the duty

between the inside and the state which will be adequate to both. GST is being viewed as a long haul

system and the organizations are equipping to support the change. They are receiving the best GST

Accounting programming that is set to make their tax collection very simpler.

Registration, payments, refunds and returns which are the entire compliance procedures under GST,

will now be executed through online portals only and this has lessened the nuisance for the SMEs as

they no longer need to worry about interacting with section officers for executing these

compliances, which in itself is considered as a problem in the current tax structure. Let’s have a look

at some positive impact that GST will bring on the SMEs in India:

Registering online will smoothen the process for SMEs especially with Tally ERP 9 as it

will ensure a seamless flow of work and the online registration will ensure that the

certificate of registration is available on time with minimal interference of government

Due to electronic compliance there will be transparency which will lessen the

compliance cost

The refund procedure will be electronic which will further fast track the process and

increase liquidity for the SMEs

In Tally GST all returns would be required to be filed electronically and the tax liability

adjustment and input tax credit will happen automatically based on these returns

GST Background

In the course of the last five to six decades the circuitous tax assessment program in India has seen a

few changes. The straightforwardness in impose organization has expanded throughout the years

because of different activities taken by the administration therefore decreasing inconvenience to

citizens, abrogating the falling impact in this manner profiting the end client. In any case, with the

structure of the Indian framework being government the duty is directed by both the state and

focus. A tiny bit of falling impact is still left in the framework because of the lack of office to utilize

credits over these two foundations. Also, as there are numerous offices required, there is an

expansion weight of consistence.

These worries are exactly tended to by GST by driving normality the country over through a solitary

duty and ensuring that the credit stream is not limited. Optimistically, one can state that GST is

much the same as VAT, which implies duty will be charged at whatever point there's esteem

expansion at each crossroads in the inventory network.

This specific tax is an all-inclusive tax imposed on the supply of services and goods across the nation.

It was June 2016, when the draft model of GST law was initially made open and which the draft was

revised and made open on Nov 26, 2016.

Let’s have a look on some of the sectors on which GST will have an impact :

FMCG Several of the rapidly moving consumer goods companies such as HUL, ITC, P&G will benefit immensely by this tax structure of a GST rate less than or equalling to 18%. Also, much relies on the exemptions which are being retained along with the excise benefits. Benefits aren’t expected to be huge and will happen slowly as per several of the analysts.

E-Commerce With GST, India will be a single unified market wherein there will be free movement and supply of goods in every corner. Bringing in more efficiency in costs of the products, this tax system will also eradicate the spilling effect of taxes on customers. Automobiles Industry experts opine that GST will lead to the dropping of on road price of vehicles by 8%. There will be several key beneficiaries of GST including some really giant companies. To Summarize, GST will eliminate the underrated prevailing tax systems and will uniformly help industries perform under one tax system thus preventing people from paying various taxes for a single product. How GST differs from present tax structure? It’s important to understand the fundamentals of GST as it’s a dual concept tax system. Under this system, tax is managed, collected and shared by both the State and Centre governments, based on the nature of transaction. It certainly differs from the present tax structure and would make the life of people easy, once implemented. Let’s have a look at how GST will differ from the current tax structure:

In the present tax structure there are separate laws for separate tax whereas in GST there would be only one such law as GST will include several taxes

Currently there are separate rates. In this system there would be one CGST rate and a uniform rate of SGST across all states

In current system there’s a cascading effect due to credit of CST and several taxes aren’t allowed. In GST, this situation won’t arise as CST concept is being eliminated with introduction of IGST

Under current scenario, tax burden on tax payer is quite high. In GST, tax burden is expected to lessen since all taxes are integrated which make it possible the burden to be divided equally between manufacturing and services

At present, there’s no concurrent power to both Centre and State on same subject tax matter in the present tax system. In GST, both Centre and State are entrusted with the power to make law on GST due to the proposed Article 246A of the constitution

Currently, tax compliance is complex due to the multiplicity of laws and their necessities to be followed. in GST, tax compliance would be easier as only one law including other taxes need to be followed

Currently, tax is imposed at two stages in broad manner, i.e. when product moves out of factory and the other at retail outlet. GST needs to be imposed only at final destination of consumption and not at several points. This leads to transparency and corruption free tax administration.

GST is clearly a long term strategy and its integration with Tally App will now extend its reach to millions once introduced. Further it would lead to a higher output, more employment opportunities and economic inclusion. Its integration with Tally ERP 9’s latest release will help small and medium sized companies manage their business in an effective way.