Evaluating the Impact on Businesses
If we look back on the 21st century in the future, Coronavirus pandemic will surely be the highlight just like the Spanish Flu and the Great Depression back in the 20th century. The impact of Coronavirus on businesses has been devastating, and it will continue to have an impact on the economy in the near future. It has disrupted the supply chains and operations of major businesses. One of the most important impacts of this outbreak is on customer behaviour.
People are more cautious with their expenditure partly due to the reduction of purchasing power parity and mostly because they don’t want to be in contact with outside elements. Most people are staying at home and even cooking meals for themselves, reducing their dependence on outside food consumption to reduce any associated risk.
This change in consumer behaviour has impacted businesses in the food and hospitality industry. Let’s take a few examples to understand how companies are recuperating from this crisis.
Businesses in the travel and tourism sector have been impacted severely as people are not travelling to different places and keep themselves indoors to stop the spread. Companies like Airbnb have even cut their human resource by 25% and limited their operations to core business activities.
Similar cuts have been made by the Indian food-tech giant, Zomato that is planning to reduce its workforce by 13% and reducing compensation for the remaining employees by up to 50%. Cab aggregator giant Uber has brutally suffered the wrath of this pandemic and has cut down its employee count by 3500 in the wake of this global pandemic.
Benefits of GST Amidst This Crisis
The Goods and Services Tax was introduced in India to simplify the indirect taxation system to have one indirect tax for the whole nation. One of the major advantages of GST was the eradication of the cascading effect of taxes. This helped the manufacturers in India to a great extent. The final prices of the goods were reduced by the additional tax amount that was paid earlier before the introduction of GST.
Sellers could avail the benefit of Input Tax Credit which could be passed down to the final consumer. It has also simplified the taxation process for small businesses, with the use of GST billing software they can even easily create and send invoices to their customers that are following the GST guidelines. Let’s delve deeper into how GST can be beneficial for businesses in this time of crisis.
The removal of the cascading effect of taxes with the introduction of GST will go a long away with manufacturers as more global companies are looking forward to India as their manufacturing destination. Companies want to reduce their concentration risk and divide their manufacturing facilities from China after this outbreak that severely disrupted the supply chains.
GST Refund for Cancellation of Goods & Services Contracts
The tourism and hospitality industries have been severely impacted during this pandemic with people staying indoors to reduce the spread of this deadly virus. Businesses in these industries are witnessing mass cancellation of booking amidst the pandemic, the CBIC authority has allowed businesses to claim refunds on the invoices generated for sales of goods and services that were later cancelled. This tax refund claim would give a much-needed safety net for these businesses in these dire times.
Online Tax Filing Portal and Deadline Extensions
The online tax filing GST portal is a huge relief for all kinds of businesses amidst this deadly outbreak. All types of business can use the online GST portal to file their returns. The easy to use interface has added guidelines for new users and first-time entrepreneurs who have to carry out multiple activities related to their business. The government has also announced deadline extensions for GST filings, reducing the tax compliance burden for businesses in this uncertain time.
As per the latest news reports, the government is planning a six months suspension of GST charges for the adversely affected sectors and lower rates for some of them. This is helpful for small businesses who are already feeling the burn from reduced sales. These businesses have comparatively very less reserved capital and could benefit from this proposed measure. This is still in development, and the government is yet to issue any full-fledged plan for indirect tax relief.