<div align="justify">Businessman Pankaj Jain is so worried about the impending launch of a new sales tax in India that he is thinking of shutting down his tiny textile factory for a month to give himself time to adjust.<br /><br />Jain is one of millions of small business owners who face wrenching change from India’s biggest tax reform since independence that will unify the country’s $2 trillion economy and 1.3 billion people into a common market.<br /><br />But he is simply not ready for a regime that from July 1 will for the first time tax the bed linen his 10 workers make, and require him to file his taxes every month online.<br /><br />On the desk in his tiny office in Meerut, two hours drive northeast of New Delhi, lay two calculators. Turning to open a metal cabinet, he pulled out a hand-written ledger to show how he keeps his books.<div align="justify"><br />“We will have to hire an accountant — and get a computer,” the thickset 52-year-old said, as a dozen ancient power looms clattered away in the ramshackle workshop next door.<br /><br />Prime Minister Narendra Modi’s government says that by replacing several federal and state taxes, the new Goods and Services Tax (GST) will make life simpler for business.<br /><br />Not so simple<br />By tearing down barriers between India’s 29 states, the GST should deliver efficiency gains to larger businesses. HSBC estimates the reform could add 0.4% to economic growth.<br /><br />Yet at the local chapter of the Indian Industries Association, which groups 6,500 smaller enterprises nationwide, the talk is about how to cope in the aftermath of the GST rollout.<br /><br />“In the initial months, there may be utter confusion,” said chairman Ashok Malhotra, who runs one firm that manufactures voltage stabilisers and a second that makes timing equipment for boxing contests.<br /><br />A big concern is the Indian GST’s sheer complexity — rates of 5%, 12%, 18% and 28%, and myriad exceptions, it contrasts with simpler, flatter and broader sales taxes in other countries.<br /><br />The official schedule of GST rates runs to 213 pages and has undergone repeated last-minute changes.<br />“Rubber goods are taxed at 12%; sporting goods at 18%. I make rubber sporting goods — so what tax am I supposed to pay?” asks Anurag Agarwal, the local IIA secretary.<br /><br />Grace period?<br />The top government official responsible for coordinating the goods and services tax rollout rebuts complaints from bosses that the tax is too complex, adding that the IT back-end that will drive it — crunching up to five billion invoices a month — is robust.<br /><br />“It is a technological marvel, as well as a fiscal marvel,” Revenue Secretary Hasmukh Adhia said.<br /><br />The government will, however, allow firms to file simplified returns for July and August. From September they must file a total of 37 online returns annually — three each month and one at the year’s end — for each state they operate in.<br /><br />One particular concern is how a new feature of the GST, the input tax credit, will work. This allows a company to claim refunds on its inputs and means it should only pay tax on the value it adds.<br /><br /></div></div>
<div align="justify">Businessman Pankaj Jain is so worried about the impending launch of a new sales tax in India that he is thinking of shutting down his tiny textile factory for a month to give himself time to adjust.<br /><br />Jain is one of millions of small business owners who face wrenching change from India’s biggest tax reform since independence that will unify the country’s $2 trillion economy and 1.3 billion people into a common market.<br /><br />But he is simply not ready for a regime that from July 1 will for the first time tax the bed linen his 10 workers make, and require him to file his taxes every month online.<br /><br />On the desk in his tiny office in Meerut, two hours drive northeast of New Delhi, lay two calculators. Turning to open a metal cabinet, he pulled out a hand-written ledger to show how he keeps his books.<div align="justify"><br />“We will have to hire an accountant — and get a computer,” the thickset 52-year-old said, as a dozen ancient power looms clattered away in the ramshackle workshop next door.<br /><br />Prime Minister Narendra Modi’s government says that by replacing several federal and state taxes, the new Goods and Services Tax (GST) will make life simpler for business.<br /><br />Not so simple<br />By tearing down barriers between India’s 29 states, the GST should deliver efficiency gains to larger businesses. HSBC estimates the reform could add 0.4% to economic growth.<br /><br />Yet at the local chapter of the Indian Industries Association, which groups 6,500 smaller enterprises nationwide, the talk is about how to cope in the aftermath of the GST rollout.<br /><br />“In the initial months, there may be utter confusion,” said chairman Ashok Malhotra, who runs one firm that manufactures voltage stabilisers and a second that makes timing equipment for boxing contests.<br /><br />A big concern is the Indian GST’s sheer complexity — rates of 5%, 12%, 18% and 28%, and myriad exceptions, it contrasts with simpler, flatter and broader sales taxes in other countries.<br /><br />The official schedule of GST rates runs to 213 pages and has undergone repeated last-minute changes.<br />“Rubber goods are taxed at 12%; sporting goods at 18%. I make rubber sporting goods — so what tax am I supposed to pay?” asks Anurag Agarwal, the local IIA secretary.<br /><br />Grace period?<br />The top government official responsible for coordinating the goods and services tax rollout rebuts complaints from bosses that the tax is too complex, adding that the IT back-end that will drive it — crunching up to five billion invoices a month — is robust.<br /><br />“It is a technological marvel, as well as a fiscal marvel,” Revenue Secretary Hasmukh Adhia said.<br /><br />The government will, however, allow firms to file simplified returns for July and August. From September they must file a total of 37 online returns annually — three each month and one at the year’s end — for each state they operate in.<br /><br />One particular concern is how a new feature of the GST, the input tax credit, will work. This allows a company to claim refunds on its inputs and means it should only pay tax on the value it adds.<br /><br /></div></div>