Consumer-focussed internet companies have milked every flaw in our primitive indirect tax laws while capturing app-based demand growth incredibly. What choice did they have? They would have been nowhere if they followed the intent of the law. Instead, armed with war chests and lawyers, they muscled and burnt their way through.
This unprecedented growth in two-dimensional behaviour was caught early by the venture and private equity suits. However, the previous governments of India until now have been largely reactionary in enacting or changing any law being blindsided at the speed of change.
Plight of small retailers: impediments to growth
So far, most states as expected have created knee-jerk opportunistic taxes and restrictions on inter-state consumer shipments. For instance, Kerala put a complete ban on e-tail, West Bengal added even more forms to fill and the rest just followed suit displaying short-sightedness by state governments, in an environment wherein GST was inevitable and the need of the hour.
Amidst this chaos, it was about time to change India’s almost 70-year-old left leaning tax laws to usher the new “economic” dawn. Driven by a majority led and motivated party in power, whose manifesto screamed financial inclusion, stability and growth, GST has finally seen the light of day.
In the recent past, the e-commerce industry has seen unprecedented growth.However, sadly the real winners comprising powerless small business owners across the country have been neglected. In a country with more than 50 million owners and the families that depend on them, so far, no one has attempted to aggregate or represent them and their interest, until now…wherein a new breed of B2B e-businesses representing the cause of small retailers will benefit from implementation of GST.
Improving ease of doing business: a borderless economy
Opening up of state economic borders will allow and benefit small scale industries, traders and shops who couldn’t afford to open 29 offices and deal with 29 tax regimes to trade openly across their own land. While improvement in ‘ease of doing business’ was always projected to the outside world to entice foreign inflows, GST is the first move in 70 years to ease doing business within borders. For entrepreneurs and professionals, the new policy streamlines businesses by providing relief from unnecessary paperwork replaced by new online filing and payments, self-assessments and fewer headings signaling a simplified and unified tax experience part of everyday life. For the more savvy tax payer, they will no longer rely only on their external auditors for every single filing or settlement.
So far, a small craftsman in Rajasthan had access to consumers across the country through some e-tailers; however, this accounts only for a small percentage of internet users. The implementation of GST will allow these small scale enterprises to connect and sell unabatedly to resellers and department stores directly, while not always having to find a local distributor or investor who would have sucked out all his margins and capital in exchange for a warehouse and access to the local market. What’s more, small traders can now invoice directly to any business without losing tax credits or filling innumerable forms.
GST for India will be somewhat similar to the Eurozone with its advantages and disadvantages. There will be states that contribute hugely and some that feed of the others not to say a similar fate will befall the new IndiaZone. If well written and well executed, new entrepreneurs will be born, existing business owners will export not just to consumers directly but to other traders. They will finally enjoy the economic benefits of access to every corner of this emerging economy. This act will potentially uplift India’s millions of unknown vyapaaris and give them a chance at the Indian dream!!
I deeply believe we are the new land of opportunity.