It has been revealed that the new provisions in GST laws will give sweeping investigating powers over small businesses. This is, in fact, a great concern for the ones running a small business, though it is being considered favorable by many.
Does the new GST law protect the small-scale duty benefits?
Traditionally, indirect tax policy makers have accorded the small industry favorable tax treatment. This favorable treatment was provided on the premise that small-scale units use less amounts of capital per unit output and also provide more employment per unit of output. However, there is not much evidence to establish that small-scale excise exemptions previously have helped immensely in the growth of the small-scale sector.
Not giving importance to these factors, the new GST law does protect the small-scale duty benefits. The GST Council, which is the joint policy formulating group consisting of both the centre and the states, has accepted an annual threshold limit of Rs 20 lakh turnover up to which GST will not be payable.
The liability linkage provision in GST Law- Taking the Credit in GST likely to become Mother of Many Disputes
The liability linkage provision allows the buyers’ credit for tax paid on inputs used only if the supplier has paid the tax within a given window. The GST Council calls for reversal of credit to the buyer in case of non-compliance by the vendor. That is, a buyer would be penalized for the supplier’s non-compliance. It could lead to preference in terms of dealing with bigger vendors which could hit the small enterprises’ sector hard.
Will GST Law be actually be able to Increase India’s Business Competitveness
GST laws propose to tax non-registered businesses from which GST registered business buy. The draft proposes tax officials to have power to question business below GST threshold. GST will be a reality soon as all states were on board and this, in turn, will unleash the growth potential of the economy. There are myriads of consumption taxes which will be replaced by the GST and this can be a game changer over the medium term because this will reduce tax cascading which will further boost up India’s competitiveness, investment and job creation.
The internal trade has improved drastically. This is definitely considered as a boon and benefit for the country’s progress in the wake of GST. There is a chance of the GST to bring about reduced tax exemption. This can have a bearing on prices of goods and capital requirement in order to manage the cross – border supply chain.