Get Ready For Some Taxing Times

Small and medium enterprises have more reasons to worry than cheer under GST 

“What is the tangible benefit that the introduction of GST [Goods and Services Tax] is going to bring to the table?” an SME owner popped the question at an interactive session held by FICCI-KPMG in Mumbai recently. Sachin Menon, FICCI co-chair GST task force, and head, indirect tax, of KPMG, replied rather succinctly, “At times, you would have wondered how some businessman or trader you know could buy an expensive vehicle? That’s going to change because a lot of folks thriving in the cash economy will now be a part of the formal economy.

There is no escaping that.” While the jury is still out on whether that will indeed be the case, the motley crowd had just about everyone from management executives to traders to SME owners, who were more keen to know whether the transition to the new regime would indeed be as smooth as envisaged and whether the payoffs would be worth the pain. With less than a month on hand, the biggest tax reform change since Independence will not just change the way India Inc runs its business but will also cast the tax net wider by bringing under its ambit the country’s entire universe of 55 million micro, small and medium enterprises (MSME), which contribute around 8% to the GDP.

Here’s a quick look at what’s good, bad and ugly for SMEs in the new dispensation.