Reform may let more small units join formal economy

Easier refunds, compliance & tax credit seen as key benefits

- MUKESH JAGOTA

THE SIMPLIFICATION OF the Goods and Services Tax (GST) regime by reducing the number of tax slabs could help address the problem of input tax credit (ITC) accumulation faced by micro, small and medium enterprises (MSMEs) and improve their liquidity for business operations, experts said.

A simplified rate structure would not only lower taxes on some MSME products—boosting their market competitiveness—but also reduce levies on several inputs, generating positive spillovers for the broader economy.