GST to boost SME sector, enable ease of doing business: Reserve Bank

New Delhi, May 13 (KNN) With the GST all set to roll out from July 1, the Reserve Bank of India sees the new tax regime instrumental in facilitating growth and enabling external competitiveness.

RBI in a report titled ‘State Finances: A study of Budgets of 2016-17’ said that the GST is likely to strengthen the structure of cooperative federalism in the country.

Talking about the Small and Medium Enterprises RBI said that the GST will boost the sector by improving the ease of doing business. The logistical costs are expected to go down this enabling the SMEs to expand their operations in different states without fearing additional tax burdens.

Also the exports are expected to be more competitive as the new tax regime will do away with the cascading impact of taxes, therefore adding impetus to the economic growth through exports.

It further said that the One Nation One Tax regime is in the best interests for State Governments as it will help in restoring to fiscal consolidation without compression of productive expenditure. Under the GST, the states will be able to maximize development as they will now be able to prioritize the expenditure in sync with the tax they collect.

The Reserve bank however did mention the challenges that are likely to emerge once the tax is rolled out. The GST implementation involves a well planned and executed dispute resolution mechanism. (KNN/ DA)