Page 11 - MSME April-May 2017
P. 11
Special Article The Bank’s researchers said currently, the Sales Tax department has various turnover slabs which require VAT registration. A business with multi-state operation in this case has to follow varied tax rules applicable to different states. This not only creates excess complication but also adds to procedural fees, due to which the price sensitive SMEs will be burdened. Uniform GST will standardize the process, lower logistical overheads. As GST is tax neutral it will eliminate time consuming border tax procedures and toll check posts and encourage supply of goods across borders. Kotak Mahindra Bank’s last year report on supply of goods across borders. Impact of GST and MSMEs bottom line had said, "the MSME sector which contributes to 40% of According to a CRISIL Analysis, the logistical Indian exports is about to go bigger with the cost for companies manufacturing bulk good will recent spate of reforms. Today, through various be reduced by around 20%. Such costs can be government and RBI led initiatives the financing crucial for the survival of SMEs. Aids SMEs dealing for SMEs have progressed". in sales and services: GST will not distinguish between sales and services. This is good news for It said a recent Credit report states that the the SMEs that deal with sales and services model of SME Loan Market is estimated to grow $3,020 business, for them the taxation is simplified. It will billion over the next decade. This brings good be calculated on total. tidings to the existing and seedling SMEs in India. RBI reforms like guidelines on purchase and sale Bank’s experts say The GST will bring good of priority sector lending certificates (PSLC) helps to the sector in more ways than one. Like Starting promote efficient lending practices for SME sector. business becomes easier: Currently, the Sales Tax department has various turnover slabs which Government plan of rating MSMEs on 50 require VAT registration. A business with multi-state parameters will enable the sector to improve operation in this case has to follow varied tax rules quality of manufacturing and gain a foothold in applicable to different states. This not only creates the international market. Other government led excess complication but also adds to procedural initiatives such as setting up of Bankruptcy Bill will fees, due to which the price sensitive SMEs will enhance the ease of doing business for SMEs. be burdened. Uniform GST will standardise the process. The Bank’s researchers said currently, the Sales Tax department has various turnover slabs which Improved SME market expansion: In the require VAT registration. A business with multi-state current system, big corporations procured operation in this case has to follow varied tax rules goods based on SME locality in order to reduce applicable to different states. This not only creates overheads. Thus SMEs limit their customers within excess complication but also adds to procedural state as they will bear the ultimate burden of tax fees, due to which the price sensitive SMEs will on interstate sales, reducing their customer base. be burdened. Uniform GST will standardize the With implementation of GST, this will be nullied process, lower logistical overheads. As GST is tax as tax credit will transfer irrespective of location neutral it will eliminate time consuming border tax of buyer and seller. This allows SME segment to procedures and toll check posts and encourage expand their reach across borders. April-May, 2017 9
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