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MSMEs grapple with complexities of GST -- with a little help from product companies

 The micro, small and medium businesses -- 90% of Indian enterprise -- have concerns about some aspects of the  new tax regime
Bangalore, April 26 2017: The Confederation of All India Traders (CAIT), the umbrella association for traders in the country  has raised concerns  about  the impact on certain clauses of the Goods and Services Tax Law on  small businesses. These businesses  traditionally suffer from uneven cash flows but are largely compliant. If availability of input tax credit is linked to payment of tax by their supplier, it will worsen the situation  for these small businesses.
Says CAIT Secretary General Praveen Khandelwal:   “The trading community and other small businesses will undoubtedly benefit from the single tax regime. However, the provisions in the law to do with input tax credit availability if not corrected will be detrimental to their survival."
Adds  Bharat Goenka, MD, Tally solutions, the well known Indian financial and accounting  software “There is no doubt that GST will be one of the great levellers in the market, and open out the Indian market for the businessman.  There are however certain provisions in the model GST law that will destabilize the SME community in the country. There is a dire need to delink payment with the availability of input credit and GST is capable of providing that because it brings a lot of transparency being technology led thus giving tremendous security and protection against tax evasion.”
Earlier this year, Tally Solutions rolled out Release 5.5, the latest version of the its Tally.ERP9 suites,  with GST ready features  for majority of Indian states. The ERP9 series is designed to empower businesses to be fully tax compliant, ensuring that tax returns reflect the books of helps businesses with simpler, easier and quicker compliance. Since its release in July 2015, Release 5 series has already been made available 24 States across the country.
Under proposed GST law, input credit against the taxes paid by the purchaser can be availed only if the seller deposits the said tax with Government treasury. In the event of non- compliance at the end of seller, it is the purchaser who will be denied input credit
|India has nearly 8 million registered businesses under the VAT regime, of which 90 percent are SMEs, and while GST will apply to all businesses with a turnover of Rs 20 lakh or more (Rs 10 lakh in case of NE states), It will be a tougher task for SMEs, compared to their larger counterparts, to move to the new regime, feels   Bikky Khosla of SME Times.
He adds: "SMEs are facing an uphill task while getting ready for GST. Unlike their large counterparts, they lack financial muscles, but the new regime will require them -- besides getting down to the nitty-gritty of migrating to the new regime -- to invest in IT systems, engage more manpower to follow-up with suppliers, automate accounting and inventory management, and align their invoice according to the new prescribed rules."

See our story on Zoho's GST-ready Finance Suite for SMEs

 




    


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