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MSMEs may not receive additional GST benefits before 2019 general elections

MSMEs may not receive additional GST benefits before 2019 general elections

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Micro, small and medium enterprises (MSMEs) may not receive more benefits under the Goods & Services Tax (GST) regime before the 2019 general elections as there has been a consistent fall in collections, The Financial Express reported.

The GST structure might not see any major change and even the new return filing system may not be implemented until the Lok Sabha polls are concluded and the new government assumes office. The report said, The government feels rolling out such benefits closer to the 2019 general elections could create technical hassles

“Tax officials and the political dispensation are wary of implementing new measures close to general elections. Apart from revenue considerations, we also have to factor in the income tax-related issues that may arise after implementation,” a source told the paper.

The government had earlier proposed additional sops to MSMEs. It, however, feels that the rolling out such benefits closer to elections could create technical hassles. The inconvenience may, in turn, offset political benefit the National Democratic Alliance (NDA) government could garner through tax sops for small businesses.

The Centre has also decided to stick to its FY19 fiscal deficit target of 3.3 percent of GDP. Amid declining GST revenues, offering additional benefits to MSMEs may hurt government’s fiscal deficit target.

Revenue collection from GST declined to Rs 93,960 crore in August from Rs 96,483 crore in July, the lowest in the current fiscal.

The decline may have been due to a rate cut on several items that was announced to provide relief to MSMEs and customers. On July 21, the GST Council had cut rates on more than 80 items across various tax slabs. The rate cut was effective from July 27.

The GST Council had set-up a Group of Ministers (GoM) on August 4 to formulate a plan for further relief to MSMEs, but the panel hasn’t met even once, the report said. The GoM is unlikely to submit an interim report during the next GST Council meeting scheduled on September 28, the report said.

The government had earlier decided to provide MSMEs additional relief as small taxpayers, who were exempt from excise duty in the pre-GST regime, are now liable to pay excise duty and Value Added Tax. The move is said to have taken away the competitive advantage from these enterprises. The sops were aimed at reducing tax burden as well as giving these firms a bit of a competitive advantage.


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Sources : moneycontrol

MSME Sector: GST Council to take up further relief

MSME Sector: GST Council to take up further relief

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The GST Council would exclusively consider issues related to micro, small 29th GST Council Meeting and medium enterprises (MSME) taxpayers at its 29th meeting scheduled for August 4, a finance ministry official said.The field formations of the indirect tax department have been asked to prepare a list of grievances and suggestions from small taxpayers, and send the same to the Central Board of Indirect Taxes and Customs (CBIC) by Friday.

Officials said that finance minister Piyush Goyal would hold a meeting with the tax department on Saturday to finalise the issues to be taken up in the council before a formal agenda is prepared. This will be second GST Council to be chaired by Goyal, who has assumed charge as finance minister due to Arun Jaitley’s indisposition.

The council in its 28th meeting last Saturday provided relief to smaller taxpayers by allowing those with a turnover up to Rs 5 crore annually to file returns on a quarterly basis even as they file taxes every month. Similarly, the reverse charge mechanism (RCM), which has been cited as a major hurdle for MSMEs in procuring supplies from unregistered dealers, has also been put on hold till September 30, 2019. RCM puts the onus of tax collection on registered buyers if the supplier is unregistered, which leads to additional compliance burden.

Given that MSMEs largely procure raw material from unregistered suppliers, the RCM provision had been cited as a major bottleneck in conducting business for these taxpayers. This is also reflected in low compliance level for GST where even after a year of the tax’s introduction, only 60% of eligible taxpayers file returns before the deadline.

“The reduction in the periodicity of returns for SME’s would encourage many more of them to be compliant and the fact that the next meeting is going to focus on MSMEs’ issues would encourage the further broadening of the GST tax base. It is very clear that the government is trying to address the concerns of a wide cross-section of businesses in order to ensure that GST achieves its objectives,” said MS Mani, partner, Deloitte India.

Experts said that MSMEs face unique issues in GST compliance, which includes bandwidth restrictions, the paucity of capital especially due to delay in refunds and issues related to knowledge of the GST Act and related rules. They need to be tackled separately as larger corporates never deal with such problems.

“Stakeholders of the MSME sector have been facing numerous challenges posed by demonetisation, rising inflation, contracting demand, shrinking bank finance and disruptive GST implementation. The next GST council meeting is focused on easing the difficulties faced by the MSME sector, and the sector anticipates some path-breaking measures beyond rationalisation of compliance formalities and tax rates only,” said Rajat Mohan, partner, AMRG & Associates.

The aforementioned letter, which has been reviewed by FE, has asked the principal commissioners “to contact the MSME taxpayers and their trade and industry associations in your respective zones, collect their grievances/issues related to GST along with suggestions thereof for mitigating the issues”.

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Source: Financial Express
National Board needs to take up the effects of GST on MSMEs

National Board needs to take up the effects of GST on MSMEs

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National Board of MSME

The meeting of the National Board for the micro, Small and medium sector, the highest policy making body for the 4 crore plus MSMEs, is going to be held on 27th April, 2017 at Vigyan Bhawan, New Delhi.

While the agenda proposes to take up a large number of issues important for the growth of the sector, GST is conspicuously absent in the agenda.

Termed as the real game changer of the Indian economy since independence, GST is expected to be in force from 1st June, 2017, just a month after.

However, the issues of capacity building and handholding of particularly the enterprises in the informal sector remain unaddressed.

KNN, the knowledge and news portal for the MSME sector reported that the Gujarat Traders Federation has written a letter to the Prime Minister outlining the obstacles GST may create to the ease of doing business.

The problem with the ‘Way Bill’ is being particularly raised by the MSME fraternity. eWay Bill mandated in the GST, must accompany every consignment being transported  and  the extent of documentation  a small transporter carrying consignment of umpteen small suppliers, have to produce   can be well imagined.

MSMEs have also questioned the need to set mobile check posts across the country, stating that this will lead to tax terrorism in the country, will lead to wastage of resources and delay of shipments.

A great concern of the micro enterprises, those in the informal sector, is realtime uploading of each invoice. With an unreliable power situation and limited broadband connectivity how it will be possible?

There are quite a few service provider in the market, but who is to guarantee their reliability and regulate the charges?

It may be mentioned that even in the advanced states the migration of existing registered dealers to the GST Network is not yet complete due to various procedural and legal wrangles.

And the task is really Himalayan for the informal sector, who so far was away from the tax system and maintained minimum records due to obvious reasons.

Even to join the ‘Composition’ scheme, they need to get registered with the GST Network with the necessary user id / password from the local VAT / tax officer.

Will the registration of these new ‘ suppliers’ with turnover beyond the exemption limit of  Rs. 20 lakh will be possible in less than 30 working days, industry bodies question??

Taking a prudent view, FISME, the leading federation of Indian MSMEs opine for a soft start of the GST for the MSMEs.

Anil Bhardwaj, Secretary General, FISME, commented, “While on the one hand Government need to handhold the informal sector to join the GST regime, on the other hand the search, seizure and prosecution, provisions of the GST Government should keep  on hold for the informal sector, at least, till 1st of April, 2018.”

Experts have also expressed their concern on the reliability of the Goods and Services Tax Network (GSTN), a ‘non – Government’ company who will provide the entire soft platform for GST and maintain the backbone.

GSTN has to prove itself in a trial run. “a very large number of returns have to be tried in a trial and that must be proved”, commented one expert.

A trial run of the GST and giving enough time to businesses, service providers as well as sellers of goods to adjust to the new tax regime could have been a good idea to soft pedal the GST regime.

While no one will ask for deferring further the much delayed ‘game changer’ Government need to check the robust ness of GSTN and start special campaign for registration of the micro enterprises.

And as the nodal body for the MSMEs, the National MSME Board needs to discuss all aspects of the MSME pain point in GST roll out.

Source :  KNN