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

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.

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