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New-Age Entrepreneurs Ecstatic About GST Bill
The new goods and services tax regime will change things for Indian and foreign entrepreneurs operating in the country
Photo Credit : PTI
India is among the top five largest startup communities in the world and these companies have created more than 80,000 jobs in the country in the past one decade, according to a report by the National Association of Software and Services Companies (Nasscom). Apparently, Indian entrepreneurs have long been predicting the Goods and Services Tax (GST), almost since the union budget of 2006-07.
Still, after it has been passed in the Rajya Sabha on 03rd August' 2016, Wednesday; Its implementation will take time - with rates need to be fixed up, rules need to be framed and bigger tax machinery needs to be in place for the collection of taxes centrally. The GST will change things for Indian and foreign entrepreneurs looking to set-up shop in India.
In the meanwhile, let's understand why young businesses should be very happy about the passing of the GST. It will ideally be fruitful for young businesses in India. If there is anyone who would like money, time and efforts being save on compliance of procedures, its startups. Startups may get tax breaks, incubation centers and easier approval to boost India's entrepreneurial spirit.
Lower Taxes on Small Businesses:
Currently, VAT applies uniformly to businesses with a turnover greater than Rs.5 lakh in most states. With the GST, however, tax burdens will be heavily reduced for businesses with a turnover of Rs.10 lakh to Rs.50 lakh, and those with revenue less Rs.10 lakh, GST does not apply at all.
Simpler Compliance, Easy Expansion:
To check the ease of doing business in any country, the main criterion is to count the number of steps involved in starting a business. In this India used to fair poorly, but now GST will prove to be a game-changer. The new entrepreneurs would need to acquire one license for their company once, and that's done. It won't matter just how many states you do business in, so long as you pay the tax.
Deepak Garg, Founder Rivago (a tech-based logistic company)
"The GST could be a game changer for the fast-growing Indian economy and provide a fillip to the Prime Minister's 'Make in India' initiative. We hope the government will move fast to simplify procedures and upgrade road infrastructure to world-class levels."
Vishwavijay Singh, Co-Founder, Salebhai.com
"I welcome the GST reform as it will help us avoid the current hurdles in business. The lack of clarity on e-commerce transactions under existing tax legislations is bound to change now. The existing indirect tax laws including VAT/CST, excise and service taxes have not been able to accommodate the evolving e-commerce ecosystem. Otherwise, the sector was facing a tough time categorizing offerings into goods or services to charge VAT/CST or service tax and grapple with problems related to permits and statutory forms for inter-state movement of goods".
Narendra Bansal, Chairman & Managing Director of Intex Technologies
"Finally India gets united, which was living in a legacy of almost 30 different markets within the country. We were saddled with a plethora of diverse state-level taxes and levies of around 25-30% - or even higher in the case of some sectors. GST will ensure an approximate tax rate of around 18%, with no double taxation and no cascading effect of multiple levies. Intex Technologies stands to benefit from a uniform tax regime because this will boost manufacturing efficiencies, increase cost savings and make products more competitive. This is a major step to 'increase the ease of doing business in India'. As 1.3 billion consumers across India benefit from lower prices, GST will spur higher consumption and increase the tax base, raise India's GDP growth by 1 or 2 points, generating millions of new jobs and driving greater prosperity. I wish all the success to the Indian government for the biggest reform after Independence."
Bhaskar Pramanik, Chairman Microsoft India
"I am pleased that the Goods and Services Tax (GST) Bill was passed in the Rajya Sabha today. It is a positive development and I hope the Government will implement this long pending reform by April 1, 2017. The Government's idea of a single tax regime is crucial to improve ease of doing business in India and address the ambiguities of the current indirect tax landscape, proving beneficial for the economy, at large."
Ashish Goel, CEO and Co-founder at Urban Ladder
"Introduction of GST will be a huge step by the government in backing its promise of ease of doing business. As a consumer e-commerce brand, our focus is on building a seamless supply chain and logistics network that helps us fulfil customer orders in different parts of the country. GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country. Additionally, it will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs. Overall, GST is going to be a game changer for most industries and especially for e-commerce."
Jason Kothari, CEO, Housing.com
The GST Bill, which was passed in the Rajya Sabha and is being touted as India's biggest tax reform, has been a long-standing request of the real estate sector that has been plagued by multiple layers of taxation. While the immediate benefits of the GST are expected to go to segments like logistics and warehousing, and retail - residential real estate, in the long term, should benefit from a unified tax regime, a lesser tax burden on construction materials like cement, steel, etc. This, in turn, can lead to lower construction costs for developers, who can pass on the price benefit to home buyers. The tangible benefits for the home buyer will also depend on the final rate of GST. If the rate is higher than the taxes being paid currently, it could increase the cost of an under-construction flat. However, the GST's impact on creating a transparent taxation system and boosting business sentiments is very positive."
At least e-commerce companies will not complain about the cascading taxes, as the GST is a huge breather, for most of businesses. Their business models have always been different from the brick and mortar businesses. However, with no clarity on the tax rates as of now, it's too early to take sides.