Impact of GST and Digital India on Indian SMEs
There are many sectors where we can have the amazing impact on goods and services tax (GST) and digital India programme. A study said that these programs are meant to support Indian economy and making all the transaction legal and transparent. Providing basic infrastructure to all type of SMEs is a big task that has to be performed by the government to have full-fledged digital India. We may have different types of benefits of GST on Indian SMEs like launching a new business becomes easier, the entire process of taxation becomes simpler, reduced cost of logistics, the distinction between goods and services will be eliminated, increased threshold limits for new businesses etc. On the other side, GST also has some demerits like multiple registrations for Pan-India businesses, returns must be filed on a monthly basis, cost of tax compliance is likely to increase, registration will be mandatory for e-commerce suppliers and operators etc. Overall, we should appreciate the GST bill that has simplified the entire process of filing and paying taxes. We can expect in future it will also increase the competition between SMEs by unifying the Indian market. If you’re proactive and take care of your GST compliance measures beforehand, you can minimize the potential negative effects of the new regime on your business. In the long term, GST is expected to have a positive impact on SMEs and the Indian economy as a whole. Irrespective of the bright side of GST, SMEs must be mindful of its accompanying challenges such as an increase in compliance costs and alignment of IT systems with new processes. Thus, for the SMEs, GST throws a mixed bag of opportunities and challenges to explore. So we can say that GST and Digital India programme, it’s a revolutionary initiative but a huge effort needs to be done to make it a success. If Indian SMEs performing cash transaction only and not following digital India programme then we also consider that cash transactions have their own drawbacks - there is a lack of transparency, need extensive bookkeeping work and reconciliation of cash takes time. Also, there is room for errors due to extensive manual work involved. Business processes take more time to complete the physical movement of cash takes time, and this can impact cash inflow drastically - a pain area for small businesses. There are many benefits of cashless/digitization of Indian SMEs likes Faster, Safer Payment Cycles, Legal Implications, Operational Efficiency, Wider Marketing Avenues etc. Indian SMEs may refer net banking/ account Transfers, Plastic Money, Unified Payments Interface (UPI), Aadhaar Payment App, E-Wallets, Point of Sale (POS), Machines Launch Your Store Online and much more e-commerce activity can be added to support Indian SMEs.
Mr. Pramod Pandey
Dept. of Management Studies