Saturday, July 08, 2017
New Delhi, 8 July, 2017: The Goods and Services Tax (GST) would boost the competitiveness of micro, small and medium enterprises (MSMEs), noted a recent joint study by ASSOCHAM- Ashvin Parekh Advisory Services (APAS).
“From an MSME perspective, GST will bring in many positives compared to the current systems such as easy process of availing input credit, single point tax, elimination of cascading tax system, and simpler taxation,” said the study titled ‘Emerging Mantras for Bankers-Borrowers,’ jointly conducted by ASSOCHAM and APAS.
The report also said that though there is no doubt that GST is aimed to increase the taxpayer base, and bring majorly MSMEs into its scope and that would put some burden of compliance and associated costs to them. But eventually, it will turn these MSMEs more competitive with a level playing field between large enterprises and them.
It also highlighted certain pros of GST on MSME sector viz., improved MSME market expansion, lower logistical overheads, boon for MSMEs dealing in sales and services, unified market and purchase of capital goods.
As part of cons of GST on MSME sector, the study highlighted – burden of lower threshold, no tax differentiation for luxury items and services, increase in cost of product, selective tax levying, burden of higher tax rate for service provider, excess working capital requirement, realignment of purchase and supply chain, dual control, high compliance burden and tax on advances, taxation under reverse charge for un-registered purchases, taxation on stock transfers and deemed supplies, time limit for return of goods sent on sale or return basis, condition of payment and filing of return for availing input tax credit and power to arrest and prosecution.
The study said that these pros offset the cons, as such the way forward while hopes rests with GST to boost the GDP growth and reduce the fiscal deficit.
Considering that all compliance procedures under GST — registration, payments, refunds and returns will now be carried out through online portals only and thus MSMEs need not worry about interacting with department officers for carrying out these compliances, which was earlier a cumbersome task.
Furthermore, Indian MSMEs would be able to compete with foreign competition coming from cheap cost centers such as China, Philippines, and Bangladesh.
The GST regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganized to organized players.
ASSOCHAM initiated its endeavor of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations, and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on www.assocham.org