It has been more than nine months since the GST was launched in India, but businesses it seems are still finding it difficult to get their head around India’s new indirect tax regime. The same was revealed in a survey conducted by Wydr. The survey comprised of 130 businesses across the length and breadth of the country. The respondents were from various business sectors like manufacturing, wholesale and retail. Some surprising insights from the survey include:
- About 19% of the respondents do not understand GST at all
- About 57% of the respondents partially understand the working of GST
- About 30% of the businesses agree that GST is far from being the projected simplified tax structure
In addition to the above, the survey found that about 53% of the businesses reported a decline in sales post-GST. Only 25% agreed that the post GST period witnessed a positive sales cycle.
More than half of the respondents were not sure or believed that GST would negatively impact businesses in the days ahead. About 26% of the businesses surveyed, reported a 30% decline in profits since July 1st, 2017.
Another common business grievance is the complexity involved in the claim process for ITC or the Input Tax Credit. GST registered businesses with annual sales greater than Rs 1.5 crore and are eligible for input tax credit. But the catch is that for the claims to be credited your input and output invoices must match. This increases compliance cost for small and medium scale businesses.
An aftereffect of this is that India’s second tryst with destiny has burdened more than 80% of the respondents in the survey with increased business operational costs. Further to add to the wounds, more than 50% businesses lament the lack of GST related help and support. However, some positive take away from the survey include:
- 45% believe that GST must be the way ahead for Indian Economy.
- 50% respondents appreciate that GST has facilitated ease of business irrespective of state borders.
India is a high GDP but low per capita economy. The initial impact of GST would have mixed reviews and the same can be seen in the Wydr survey. Looking at the scale of implementation and the widely different Indian demographic, we must appreciate the Government for its efforts till now. However, this does not mean that the GST is taxpayer friendly. There are still issues which need immediate solutions. In addition to this, the GST Council needs to ensure that it properly educates SME owners about the in and out of the GST – The One Nation One Tax.
