How GST could turn the table for startup ecosystem?
GST- is it a gamechanger for startups?
Anshul Dave, CEO and Managing Partner, Oceans Bridge
GST is one of the biggest tax reforms in India post-Independence in 1947. We all know that currently India ranks very low (around 130 in the world) in ‘Ease of Doing Business.’ This is set to drastically change under GST. Different states had different taxes rates and different slabs and different tax laws. So there was triple whammy of taxation which will be now gone under GST as there will be uniform rate, uniform slab across India.
GST will be a strong enabler for startup ecosystem because it will streamline and make our tax collection system more effective. Startups will now be able to enjoy tax credits on their purchases. This benefit will be more for the startups engaged in providing services. It will thus reduce their cost and improve their working capital cycle and help them avoid liquidity crunch.
The manufacturing sector will try and find economies of scale under the uniform tax regime, a lot of big companies will reach out to (MSMEs) Micro, Small & Medium enterprises across the country and it will give big boost to the ‘Make In India’ campaign. A lot of automation will be needed and this and it will give rise to use of IoTs (Internet of Things) and AI (Artificial Intelligence) and MAL(Machine Learning).
With the growth of more and more digital companies, a lot of FinTech startups will be needed to provide fast, digitally enabled financial solutions because there will be more Financial Inclusion in the country.
For e- commerce and online services provider startups there will be uniformity and simplicity of tax regime throughout the country. This will increase their efficiency and help them concentrate on improving their operations and in-turn their profitability.
Logistics cost across states will come down because Interstate movement will become cheaper and less time consuming.
A lot of innovation will happen to improve Supply Chain Management (SCM) as big companies will no more maintain different warehouses across state due to differential tax rates.
Overall GST will prove to be a big blessing for the Startup Ecosystem.
How could GST help your everyday life and business? Do share your views.