According to a Deloitte survey, the Goods and Services Tax (GST), which was implemented in India in July 2017 as a significant reform to simplify and unify the country’s tax system, has had a significant impact on the Indian economy, with 88% of medium, small, and micro enterprises (MSMEs) reporting lower costs for goods and services and improved supply chains.
MSMEs attributed the decreased costs of goods and services to the improved uniformity in the GST regime, as per the survey that gathered 612 responses (including large enterprises and MSMEs) from six industries to understand India Inc.’s views on the integration of GST against the ease of doing business (EoDB) in India, tax technology, investment-centric growth, taxpayer profiling, and recommendations.
According to 74% of MSME respondents in the survey, MSMEs have benefited from some of the GST’s new policies, such as an increment in the registration threshold from US$ 24,400 (Rs. 20 lakh) to US$ 48,801 (Rs. 40 lakh).
Similarly, 73% of respondents claimed that lowering the eligibility requirements and constraints for the composition scheme was advantageous to them, while 55% cited the advantages of invoice financing programmes offered by various providers based on GST-reported invoices as well. Moreover, 46% also mentioned the offline option offered for creating e-invoices without spending any money on technology that helps MSMEs.
Mahesh Jaising, Partner and Leader, Indirect Tax, Deloitte India remarked that India Inc. is continuing to look forward to further promotion of EoDB reforms, working capital rationalisation, and reductions in input tax restrictions. The 22% year-over-year (YoY) growth in GST revenue is evidence of the nation’s general economic growth and taxpaying-focused administration, he added.
Furthermore, the survey also revealed, over 16% of MSMEs reported that the GSTR-2B (auto-generated input tax credit statement) has improved vendor account management, enhancing seamless credit flow. More than 50% of MSMEs demanded the elimination of restrictions on input tax credits, such as those relating to workers and the establishment of commercial infrastructure, as well as the rationalisation of GST rates for the whole supply chain.
