The arrival of Goods and Services Tax (GST), a single window taxation system, is supposed to help SMEs which are often burdened with taxes and its compliance. Whether the GST will be a boon to SMEs or not is still to be seen, but it is expected that all the states will pass this Constitution Amendment Bill in their respective Assemblies, helping in initiating a single window indirect taxation system.
With over 51 million SMEs in India, it contributes 50% of the industrial output and constitutes India's 42% export earnings. Thus SME, the leading employment generating sector other than IT, holds the key in the post-GST era and understanding of its impact.
Marginal reduction in tax payments
For most SMEs, tax payment is a big issue when the organisation is yet to flourish. Before GST, business organizations having a turnover of more than Rs 5 lakh had to pay VAT registration fee. With GST, the lower ceiling for such businesses will be Rs 20 lakh (Rs 10 lakh for NE states), providing a huge relief to young entrepreneurs, allowing more categorical investment, leaving a room for reaping benefits in the near future.
The CEO of Honcho Commercial Pvt Ltd, Tanay Ghosal says, "Exemptions up to Rs 20 lakhs, along with the registration required for individual or company having a turnover of Rs 20 lakh or above which was previously Rs 10 lakh will help the startups. All SMEs will benefit as they would not need to register if they have a turnover less than Rs 20 lakh."
With over 51 million SMEs in India, it contributes 50% of the industrial output and constitutes India's 42% export earnings. Thus SME, the leading employment generating sector other than IT, holds the key in the post-GST era and understanding of its impact.
Marginal reduction in tax payments
For most SMEs, tax payment is a big issue when the organisation is yet to flourish. Before GST, business organizations having a turnover of more than Rs 5 lakh had to pay VAT registration fee. With GST, the lower ceiling for such businesses will be Rs 20 lakh (Rs 10 lakh for NE states), providing a huge relief to young entrepreneurs, allowing more categorical investment, leaving a room for reaping benefits in the near future.
The CEO of Honcho Commercial Pvt Ltd, Tanay Ghosal says, "Exemptions up to Rs 20 lakhs, along with the registration required for individual or company having a turnover of Rs 20 lakh or above which was previously Rs 10 lakh will help the startups. All SMEs will benefit as they would not need to register if they have a turnover less than Rs 20 lakh."
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