Small, medium firms will be more competitive with GST, says Assocham
The Goods and Services Tax (GST) will boost the competitiveness of micro, small and medium enterprises (MSMEs), the Associated Chambers of Commerce and Industry of India (Assocham) said on Sunday, citing its report on the unified pan-India indirect tax regime. "From an MSME perspective, GST will bring 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," according to the Assocham and Ashvin Parekh Advisory Services (APAS) joint study titled Emerging Mantras for Bankers-Borrowers.
With the GST designed to increase the taxpayer base and bring more MSMEs into its scope, it would put some burden of compliance and associated costs to them, Assocham said. "But eventually, it will turn these MSMEs more competitive with a level playing field between large enterprises and them," it added.
The study listed the negative implications of the GST for MSMEs as being the lower threshold, no tax differentiation for luxury items and services, increase in product cost, selective tax levying, and higher tax rate for service provider.
Among other negatives it listed excess working capital requirement, realignment of purchase and supply chain, dual control, high compliance burden and tax on advances, tax under reverse charge for un-registered purchases, tax 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 of arrest and prosecution.