GST- The Game changer for E-Commerce sector has paved its way for implementation from 1st July 2017. Migrating to Goods and Services Tax (GST) is a time to revisit the taxation policies and remove the anomalies. Goods and Services Tax (GST) is expected to provide the much-needed stimulant for economic growth in India by transforming the existing basis of indirect taxation towards free flow of goods and services within the economy.
Small and Medium Enterprises and Startups will be affected the most with the rollout of the GST and the impact will be favorable in many ways opening gateways for more business in the economy. A few of the factors causing ease are:
GST enables a centralized registration that will make starting and consequent expansion of a business easier - an added advantage for SMEs.
The government mulls the exemption limit under GST to be twenty lakhs giving relief to over 60% of small dealers and traders.
The near challenges ahead with regard to GST rollout are:
Clubbing Taxes: The biggest challenge of GST implementation is bringing all the indirect taxes under one roof, which is the biggest feature of GST. There has been an opposition on this asking to include purchase tax by a few states.
Statutory Requirements: It is seen as a difficult task as the law expects at least two-thirds majority from the members of the parliament and that isn’t easy given the current political scenario of the country.
Make-shift Arrangements: State governments are demanding compensation from the central government as they foresee a major dent in the revenue due to CST losses.
Framework for Tax Disputes: There has to be a uniform legal procedure for tax disputes and litigations to avoid any confusion.
Determining GST Rates: This is a major step in ensuring the success of GST. Arriving at rates which are conducive to both the government and public will be a daunting task.
Another major reform in the Government Policy was the abolition of FIPB (Foreign Investment Promotion Board), to bring more FDI policy reforms. FDI applications now falling under the government approval route will be handled by the respective ministries/ departments, in consultation with the Department of Industrial Policy and Promotion. Such a step by the Government shall make India a far more investor-friendly destination, and seeks to act as a further catalyst for the ‘Make in India’ campaign of the Narendra Modi government to accelerate the growth of the economy.
The Reserve Bank is working on a framework to facilitate an objective and consistent decision-making process regarding cases that may be determined for reference for resolution under the IBC (insolvency and bankruptcy code). Reserve Bank has already sought information on the current status of the large stressed assets from the banks.
The Reserve Bank is also emphasizing on an important role for the credit rating agencies in the scheme of things and, with a view to prevent rating-shopping or any conflict of interest, is exploring the feasibility of rating assignments being determined by the Reserve Bank itself and paid from a fund to be created out of contribution from the banks and the Reserve Bank.
Wishing everyone a very Happy Eid!