Taxvibe is a GST service provider company in Chandigarh. We are one of the best GST consultants and GST training institute in Tricity. There are many questions come in our mind related to GST like what is GST and it’s beneficial or not? And another important question is how GST impact on manufacturers?
The manufacturing sector of any country is a large economic driver of the growing economies around the world. However, dissimilar to others, India’s manufacturing industry is still struggling with the others and the achievement is being the lusterless.
India’s complicated tax structure can slightly be blamed accursed for the lifeless growth of this industry. Our government knows the importance of the manufacturing sector and takes several steps in the new past to make India a manufacturing hub at global level.
The new goods and services (GST) rule is also a step which will act as a motivation for dynamic growth of manufacturing industry. It will have a significant impact on compelling organizations to reorganize bottlenecks like production time, production cost, compliance, supply chain, logistics etc. And business avenues with the changing indirect tax structure.
In this article, we shared few GST impact on manufacturers in India are given below:
- Increase compliance requirements: Goods and services tax will demand businesses to set-up a system for meeting the GST requirements. Increased compliance will close alternatives in the tax framework, but increased the initial costs for the businesses. Once the businesses prepare themselves to meet the GST requirements, the costs of compliance will come down intensely.
- Reduced cost of production: To cut down the cost of production while establishing a correct value for customers is a frightening challenging for all manufacturing businesses. The proposed GST (Goods and services tax) will cut down the descending of taxes and will pass to a lower cost of production.
- Area based exemptions: manufacturing units in backward and remote areas enjoy tax exception based on their locations. According to the theory of GST, since the whole country is considered an undivided market, the location based exceptions stands invalid. This facility is a true issue of involvement for companies presently enrolled under this reason.
- Increased working capital: In the current system of taxation, stock transfers are not administrated to the taxes. However, once the goods and services tax is implemented, stock transfers will have an applied GST (goods and services tax) and will be examined as supplies. This is likely to result in cash flow barriers and therefore, manufacturing companies may have to arrange their supply management strategies in a way that minimizes the cash flow impact.
GST Impact on Manufacturers