By Hardik Harsora, Co- Founder of Effex Business Solutions
This article was originally published by BW Disrupt & Tech seen
Mumbai, Jan 2017 – Indian SME is undoubtedly a strong contributor to the economy. The SME sector generates significant employment while inputting considerably to the industrial output.
While the union government continues to float policies and schemes to smooth en business challenges for the SME, there are further hopes from the Union Budget this year. Like year on year, the SME looks forward to business loan aids, easier compliance’s, tax reliefs, etc. for it to thrive.
However, this year, among other things, the one big change which has occurred in the life of an SME, and more an MSME, is shift to a cashless economy. The focus thus will be on matters that will encourage this sector to welcome this big change. As a process consultant, specializing in business improvements for the Indian SME, I cannot emphasize enough the need for them to adopt systems in every function of their organization for continuous growth. SMEs today operate their businesses in an extremely conventional style. There is lack of smooth flow of information among departments which often leads to rise in order delays and customer complaints. This also results in people issues as company is prone to blame games and lack of ownership by people. Lack of robust inventory management system, for example, leads to bottlenecks in cash flows. No collection management system leads to leakage in revenues despite deliveries met. No sales management system leads to direct loss of possible incoming business and so on. It will hugely merit the SME to have a budget which is able to motivate implementation of software and technology, therefore.
Incentives are great stimulants for people to do what one wants them to do. If we want to push our SME to adopt systems and processes to get to the next level of doing business, then the government must announce a good number of incentives for the same. For instance, there could be award for SMEs for implementing process improvements leading to innovation or implementation of best marketing strategy. It could also lead to improved customer focus or drastic jump in top line or bottom line.
Other than this, SME is expecting the announcements on implementation of the Goods & Services Tax (GST) from this budget. The move from complex tax structure to a simpler GST will be a game changer especially for e-commerce and trading sector. GST is expected to unify the Indian marketplace and break tax barriers between states, bringing in a uniform tax rate across the country. This will lower the cost of goods by reducing the flowing effect of goods or services getting taxed at multiple points.
Either, onset for applicability of Service Tax should be enhanced from Rs 10 Lacs to 25 Lacs or Service Tax rate must be drastically slashed to a 10%. The cost of compliance for this is relatively very high for all such assesses who are otherwise not subject to any other tax and hence a deterrent for the SME of a service sector.
The budget should simplify the tax rules; improve tax compliance’s and lower tax litigation’s. The use of technology should be efficiently and diligently put in action to facilitate a full-fledged online automated system for completing all type of clearances, approvals and formalities required for starting and operating a business and bringing a maintainable model of development for the SME industry.
The Indian SME is on the verge of moving towards path-breaking progress and just needs one slight momentum. And this year’s budget could be just that.