What GST 2.0 Means for Nano Enterprises in India
The Government of India has introduced the next set of reforms in Goods and Services Tax (GST), known as GST 2.0. GST 2.0 mainly focuses on the reduction and simplification of tax rates, along with a few other changes. The economic intuition behind these reforms is simple: fewer taxes mean firms can charge lower prices without affecting their profits. Lower prices mean more demand, which bodes well for businesses.
The rate cut is sweeping, and hence we expect the high tide of greater demand to lift all boats—bigger firms, medium enterprises, as well as nano enterprises, which make up the bulk of enterprises in the economy. For easy reference, nano enterprises are businesses with an annual turnover of up to ₹1 crore. And though statisticians and empirical economists may have their qualms around accurate estimates, at least 80% of enterprises in India fall into the nano category, which is part of ‘micro’ enterprises as per the official definition.