Over 53% of the respondents admitted to having experienced a decline in their sales
Nine months after the goods and services tax (GST) was launched in the country, most businesses are still struggling to understand the new indirect tax regime, a survey conducted by the online wholesale marketplace Wydr has revealed.
According to the survey, 57% of the respondents representing manufacturers, wholesalers and retailers said they are yet to fully understand the working of GST, while nearly 19% (one in five) said they still do not understand GST at all. A total of 130 businesses across India were surveyed on how the GST regime has impacted their business.
"The scale of implementation for the GST is unprecedented anywhere in the world, which naturally leads to some challenges and teething troubles in the first few months. The survey's results demonstrate that even though significant progress has been made in GST rollout, the administration needs to enhance its focus on educating small and medium business owners across India," said Devesh Rai, founder and CEO, Wydr.
Wydr is a B2B app-based marketplace for retailers and wholesalers to buy directly from distributors and manufacturers.
As per Wydr's survey, over 53% of the respondents admitted to having experienced a decline in their sales and revenues post the introduction of GST, while only 25% said the impact on sales was positive.
The industry seems to be struggling to make profits post GST, with about 26% saying they saw a decline in profits by more than 30%. More than 55% respondents are unsure or believe that GST is not good for their businesses in the long run.
"Those businesses whose annual sales cross a threshold of Rs 1.5 crore and fall under the GST are liable to remit GST and are eligible to deduct input tax credit. This increases the complexity. Also, firms don't just need to apply the correct rate, but also have to match invoices of their outputs and inputs in order to be eligible for full input tax credit, which increases compliance costs further. However, the government is working towards minimising the issues. It has not even been a year since the tax system has been implemented and considering the scale of implementation, I think we are much better off," Rai said.
However, it can't be ignored that the 'one nation one tax' system has left 82.8% of the respondents with new additional costs and increased their business expenses. Nearly 30% believe GST is not a simplified tax structure and still requires a lot of understanding, while more than 55% said they do not get GST-related help easily, which indirectly hinders their progress. As per the survey, almost 45% believe that GST is good for business in the long run. However, about half of the respondents agree that GST has opened up scope for expanding their business in other states of the country.
STUMBLING HARD
- Over 53% of the respondents admitted to having experienced a decline in their sales
- About 26% have seen a decline in profits by more than 30%
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