While the removal of the Octroi at the inter-state borders will be the most visible benefit of the Goods and Services Tax (GST), it may be only around 2026 that the tax regime's fallout will impact growth, according to a study done by trade body ASSOCHAM. The study says by that time industry alone is expected to contribute $280 billion to India's Gross Domestic Product.
The ASSOCHAM Secretary General S. Rawat said the ease of doing business would go up significantly and the operational efficiency would improve singularly from the removal of check posts at inter-state borders. Describing the GST, in the short-term, as a "mini budget short of projection of estimated revenue" the paper said most businesses would be able to get significantly more credits under GST, leading to a benefit for most of them.
"It will bring a systematic approach and enhance transparency, which will aid growth of business and would help the industry to concentrate on its core business,” the paper said.
Notwithstanding the teething troubles, the GST would make even the micro, small and medium enterprises (MSMEs) more efficient and confident, integrating them well into the mainstream of the economy. "Eventually, GST will turn these MSMEs more competitive with a level playing field between large enterprises and them. Furthermore, the Indian MSMEs would be able to compete with foreign competition coming from cheap cost centres such as China, the Philippines and Bangladesh."
Among the other benefits to the industry and particularly the SMEs, they would find it easier to start business and there will be improvement in the market for the MSMEs. Besides the logistics overheads would be lower as the country-wide market becomes unified.
