Page 37 - Banking Finance July 2017

ARTICLE

of 90% of their claims arising on account of exports
within 7 days.
c) Precisely GST will boost to manufacturing activity, ex-
ports and consequent generation of more employment
resulting in reduced poverty and increased GDP growth.
It is estimated to increase the GDP growth by 1.5% to
2%.

d) It will improve the overall investment climate and boost
Foreign Investment in Indian industry
e) Uniform SGST and IGST rates are expected to reduce
the scope for tax evasion.
f) GST is expected to increase Government Revenue by d) Implementation of GST during the middle of year :
widening the tax base and improving the taxpayer com- The tentative GST implementation date is 1st July 2017
pliance if not extended. Thus implementation of GST during the
middle of year means running both tax systems parallel
Major Disadvantages in GST Regime: and entail additional burden, more hassles and expen-

a) Higher tax burden for manufacturing SMEs : Small diture for businesses in 2017-18 .
manufacturers' tax burden will increase since under e) Possible increase in prices of certain goods due to
the existing excise laws, only manufacturers with a turn- increase in tax rates : As proposed by the GST Council,
over more than Rs.1.50crores have to pay excise GST has only 4 tax rates of 5%, 12%,18%& 28%. So in
duty, but in the GST regime they will come under GST many sectors, tax burden will increase which in turn will
when turnover will be more than Rs. 20 lakh. Thus GST increase the price of final goods. Again Composition
will increase the tax burden for many manufacturing scheme is available only for businesses selling goods, but
SMEs. not available to service providers. It will also affect
b) Increase in Tax management expenses : Currently price.
many small businesses do not engage professionals. They f) Problems for e-commerce : Nowadays, many SMEs op-
themselves calculate and pay taxes and file returns on erating e- business or on-line selling through their own
their own to save costs. But in the GST regime, they websites or through third party websites will be re-
will require professional assistance, as the entire sys- quired to register for all the states to sell to different
tem is IT-driven under GSTN and it is a completely new parts of India under GST regime. Furthermore they will
tax system. Though this system may be good for pro- not be eligible for composition scheme and will be re-
fessionals, the small businesses will have to bear the ad- quired to pay taxes like any large organization.
ditional costs of hiring experts. Furthermore businesses
We know, every Change has its own merits and demerits.
have to bear expenses to train their employees in GST
Being a revolutionary and the most historic tax reform, GST
compliance.
is sure to bring some challenges along with many benefits
c) Need for new software for big business houses : Cur- for all concerned. Hopefully Government will pay proper
rently most of big business firms have been using ac- attention to the problems being apprehended by us so as
counting software for filing tax returns for excise, VAT, to make this revolutionary tax reform, the best in the world
and service tax already incorporated. The change to and acceptable to us all.
GST will require them to purchase new software or ERPs
for filing GST returns and compliances, which results in In the next issue we will discuss about Levy and Collection
additional costs of purchasing new software. of Tax under GST Regime. T

BANKING FINANCE | JULY | 2017 | 37

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