Ease of Doing Business for MSMEs: India SME Forum, an sector body for MSMEs, has lately sent a representation to the Goods and Services Tax (GST) council recommending approaches to sustain and revive the sector that is presently beneath tremendous strain due to the enormous second wave of Covid19 pandemic.
The representation recommended permitting of Input Tax Credit (ITC) to be converted into tradable instruments (secured) to unlock capital. “ITC is an industry-wide concern especially for MSMEs that are operating on low capital margins and particularly for those sectors where inverted GST structure is present,” Sushma Morthania, Co-Founder & Director General, India SME Forum mentioned in the letter to Union finance minister Nirmala Sitharaman.
It additional proposed that MSMEs that sell on the web be permitted to be present in numerous states devoid of possessing Principal Place of Business (PPOB) in all the states. They could be expected to have PPoB registration in their home state only.
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“At present, an MSME wishing to sell online is mandated to obtain GST registrations (PPoB) for every state where it wishes to conduct business. However, there has been a delay in availing GST registration which is stalling onboarding of MSMEs on e-commerce platforms. Apart from application errors, prominent reasons for delay in availing GST registration are ‘physical visit-business not present’ and ‘trade licence/professional tax certificate not present’,” the letter stated.
Concession from physical verification (of the spot of company by means of a physical stop by to Aadhaar verification centre and/or internet site stop by of the spot of company) for having GST registration was also sought.
It additional asked for refund of inverted duty structure to be extended to input services. Currently, as per the CGST Act, one of the situations when refund can be claimed contain when the GST paid on inputs is greater than the GST on outward supplies. A circumstance referred to as a case of inverted duty structure.
However, the Section 53(3) (ii) of the CGST Act categorically covers a circumstance exactly where the inverted duty structure is due to a greater price of GST on inputs. However, there is no distinct mention of greater price of GST on input services.
To illustrate, an MSME engaged in the sale of apparel which attracts GST at 5% and 12%, incurs GST at 18% on input services, such as logistics, warehousing, advertising, and so forth. will be in a perennial excess GST credit circumstance with no refund becoming achievable.
“There cannot be differential treatment vis-à-vis input services and input, as inverted duty on account of both add to the cost of doing business,” mentioned Morthania.
Other suggestions integrated extension of due date of GST Returns and waiver on late costs and interest and reduction of the GST prices on the Covid-associated products such as oxygen concentrators, O2 cylinders, Oxymeters to make them cost-effective and accessible to all.