MSME Sector: GST Council to take up further relief : 26-07-2018

The Goods and Service Tax Council would exclusively consider issues related to micro, small 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 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, 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 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”.

Source : Financial Express

error: Content is protected !!