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Editorial
GST focus on MSMEs
The GST Council will do well to focus on the concerns of small firms and micro industrial units and address their problems
ActIT Jammu, ASP.net Projects, Java, Vb.net, C# Training Jammu
The central government appears to have woken up to initiate measures for providing some relief to the Micro, Small and Medium Enterprises (MSMEs), that have been facing problems in filing cumbersome return under the year old Goods and Services Tax (GST) regime. This is a huge chunk of industrial units that form the majority in this sector that has been ignored by the BJP-government during the past one year. In fact, the representations made to the GST Council remained unaddressed for the reasons best known to the government. The GST Council met last Saturday for the second time within a fortnight on the request of the member states, which have been facing hurdles in filing of monthly returns. The GST Council, this time refrained from any changes in the rates on various essential and consumer durables. It is noteworthy that the new indirect tax regime has expanded India’s tax base and brought more firms into the formal economy, revenues have slipped somewhat after peaking at Rs1.03 lakh crore in April, for taxes accrued in March, this year. The first three months of this financial year have yielded Rs 94,016 crore, Rs 95,610 crore and Rs 96,483 crore, respectively - this is well short of the Rs 1.0 lakh crore revenue target a month for 2018-19. The steep rate cuts affected on several items in the last GST Council meeting were to kick in from July 27, so their full impact on revenue collections may take more time to unfold. The rough estimates of the international body, Moody’s Investors Service observes that the revenue loss from the most recent tax cuts may be only in the range of 0.04-0.08 percent of the GDP annually. This is marginal at best, and could be offset by stronger consumption-led growth and better tax compliance. But it is in this context of revenue concerns that the Council’s dedicated focus at its latest meeting on issues facing micro, small and medium enterprises (MSMEs) is a creditable move. It is unfortunate that most of the small units located in states across the country have been facing closure and added to the woes of the BJP-government so far as loss of employment opportunities is concerned. Despite tall claims of the centre, the work force in both the government and private sector has been downsized and to save on extra burden caused by the GST regime. This further led to unemployment of the permanent work force in both the sectors.

The decision to set up a ministerial group to look into the problems faced by MSMEs since India moved to the GST regime last July is a signal that the government is not brushing aside the implementation issues that still trouble smaller players. Firms with an annual turnover of less than Rs 5 crore constitute almost 93 percent of the registered taxpayers under the GST regime. At its previous meeting, the GST Council had decided that such businesses need no longer file cumbersome returns every month, but only on a quarterly basis. There may be more room for the ministerial panel to recommend further easing of compliance for micro firms with turnover far below Rs 5 crore and enhancing the Rs 50,000 threshold for mandatory use of e-way bills to track movement of taxable goods. A deeper dive to understand why 1.7 million taxpayers had registered under the GST by December 2017 although their operations were below the taxable limit could also yield some pointers. The GST Council meeting has also, wisely, returned to a consensual approach on decisions. While a few states had reservations about the rate cuts at the last meeting, this time their concerns on a proposal to push digital payments by offering a cash-back to consumers using RuPay cards or the UPI platform have been incorporated. Now, the states can volunteer to run a pilot on these lines and a final decision will be taken after a detailed system-wide evaluation of such incentives. This gives an indication that the centre’s keenness to retain a cooperative approach with states that has generally marked the Council’s functioning. Incorporating suggestions from the states can also help in saving the MSMEs from being closed down permanently due to economic slowdown and glitches faced under the new GST regime.


News Updated at : Friday, August 10, 2018
 
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