Tax aftershock creates widening two-speed economy in India

Mumbai

INDIA'S biggest tax overhaul since independence has driven a wedge between companies that have adapted to the new levies and a vast swathe of small businesses, representing almost half the economy, that are struggling.

The trend emerging from the first quarter of earnings since the goods and services tax, or GST, was introduced on July 1 shows bigger companies such as the Tata Group's Titan Co Ltd, India's largest carmaker Maruti Suzuki India Ltd and Godrej Consumer Products Ltd have used the disruptions to gain market share.

Smaller operations are reporting that increased compliance costs, supply-chain disruptions and policy changes have hurt profits and forced some to shed workers.

Last week the government cut the tax payable on about 200 items and eased filing norms after it was criticised by some for a chaotic roll-out as companies grappled with the multi-tier structure and onerous reporting sys…