Bhubaneswar: President Utkal Chamber of Commerce and Industry Limited(UCCIL), Dr.Prabodh Kumar Mohanty has lauded the latest reforms to the Goods and Services Tax (GST) regime represent a significant transformation for India.
The key benefits cited include empowering Micro, Small, and Medium Enterprises (MSMEs), which are the backbone of the economy, creating new jobs, and increasing consumer spending. A major aspect of this transformation is the enhanced financial capacity of the MSME sector, which is crucial for its growth and sustainability.
The GST reforms are designed to address some of the long-standing challenges faced by MSMEs in India. The changes are expected to:
Simplify Compliance: The new system aims to reduce paperwork and streamline processes, making it easier for small businesses to register and file returns. For example, a new Simplified GST Registration Scheme allows low-risk businesses to get registered within three working days, benefiting around 96% of fresh applicants.
Reduce Tax Burden: The rationalization of tax slabs, with many goods and services moving to lower tax rates, directly benefits MSMEs by reducing their tax liability. This can lead to lower prices for consumers, which in turn boosts demand and helps these businesses grow.
Improve Cash Flow: By addressing the inverted duty structure and simplifying refund processes, the reforms are expected to free up working capital for MSMEs, which is often tied up in tax credits. This helps them manage their finances more effectively.
Promote Formalization: The GST system inherently encourages businesses to become part of the formal economy through its input tax credit mechanism. This helps them access formal credit and other benefits.
The reforms are expected to have a significant ripple effect on the broader economy. By cutting taxes on a wide range of everyday consumer products, from personal care items to household appliances, the government aims to increase the purchasing power of the common person.
This boost in consumer spending is expected to drive demand, which in turn will encourage businesses, including MSMEs, to expand their operations and hire more people, thereby creating jobs, said Dr.Mohanty.