Before the Goods and Services Tax (GST) regime was formally implemented, Raju had heard his father and his trader friends express concerns about the incoming taxation system. Despite attending multiple seminars and conferences organised by the government and trade bodies, these businessmen and many others like them were apprehensive about the overhaul in the country’s taxation system. While the previous taxation regime had been fraught with corruption and several inconveniences in the form of unannounced inspections, it had at least been familiar and everybody had become comfortable with it.
Raju’s father had been planning for the last few months over the need for a business loan to scale up his production and hire more talent for his factory. While he had researched judiciously and settled upon Finserv MARKETS as the best portal to get a small business loan, he was yet to apply for business loans ahead of the GST. The interest rates of loans were among the concerns the businessmen raised while pondering the future of their businesses post implementation of the GST.
Success of GST
- No hike in inflation rate: Before the GST was implemented, it was predicted that it would lead to inflation rate increasing manifold. However, results indicate that the multi-slab structure of taxation ensured that the new taxes weren’t that much different from existing rates; thereby arresting inflationary trends.
- Lower cost to consumer owing to higher mobility of goods: Another benefit of GST is that it led to dismantling of check posts, which resulted in quicker movement of goods across the country. Previously, delays at these check posts had increased costs for the logistics sector and translated into increased costs of goods for consumers. This has been put to rest by the GST, which has gone a long way in creating a unified national market.
- Same tax rate nation-wide: Post the GST, consumers in Tamil Nadu were paying the same rate in GST as consumers in Jammu and Kashmir or even Mizoram. Where previously businesses had to design their operational methodologies, including production and distribution, in a way that raised costs minimally while moving through different states – this has been streamlined by the GST. Thus, businesses are now enjoying greater operational efficiency than ever before. If you were waiting, like Raju’s father, for the new taxation regime to be clear, now is a good time to get a small business loan. You can apply for business loans on Finserv MARKETS, and use the business loan efficiently to scale up operations and even increase efficiency through use of more machines to optimize processes.
- Tax base has widened: GST was implemented in hopes of widening the tax base, and increasing compliance from among unorganised businesses in the country. New numbers suggest that more businesses that were previously not paying taxes have signed up for the GST.
You can also read about components of GST.
Failure of GST
- Technological processes: The compliance process designed for businesses turned out to be more complicated than was previously anticipated. This led to an overhaul of the technological processes, with new forms being drafted to aid businesses in ensuring compliance.
- Registration required in all states: A major pain point with businesses has been that registration is required separately in all states. This was a major dampener for the industry, who had been promised that the GST regime would ensure simplicity in filing of taxes and getting returns credited.
- New cesses: While the GST itself subsumed 17 taxes within its indirect taxation system, several new cesses were introduced as the system unfolded. This included the compensation cess for luxury and sin goods, which was later also expanded to include sale of automobiles.
- Exporters facing refunds problems: Exporters have seen working capital requirements rise, post implementation of GST, owing to the exports’ refund mechanism which includes data matching law and their procedures.
While the successes are definitely something the government is celebrating, they are also working towards reducing the failures. It would be wrong to declare the GST as an outright success or failure right away. Instead, it’s better to wait and see if the failures and issues businesses are experiencing will be ironed out or whether new issues will crop up.
Raju’s father, like many other small businessmen, is currently focussing only on growing his business. He is compliant with the new taxation system and is able to reach out to government officials for aid whenever he faces doubts, which is a measure he is grateful for. With his current level of compliance, he is confident that he will get a small business loan on Finserv MARKETS, which offers loans for up to Rs. 30 lakh with approval in less than 3 minutes. His flexible repayment tenure ensures that he can repay the business loan from anywhere between 12 to 60 months. He has been recommending others in his network too to apply for business loans and use the funds judiciously to grow their business.
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