REVIVING MSME SECTOR
The GST treat will help the sector regain health
It’s raining sops for the micro, small and medium enterprises (MSMEs) with the GST Council having doubled the tax exemption limit to Rs 40 lakh in annual revenue. The GST bonanza comes in the wake of a series of measures announced by the Narendra Modi government last November ranging from granting loans at the shortest possible time, whittling down the Inspector Raj to making it mandatory for public sector units to buy a certain percentage of goods from women entrepreneurs. The government is more than willing to revive the MSME sector, which had been badly hit by demonetisation. So much so that the RBI had even decided to permit a one-time restructuring of existing loans to MSMEs that are in default but the loans given to them have continued to be classified as standard assets. Coming back to the GST treat, now that businesses with an annual turnover under Rs 40 lakh will be exempt from registration and payment of GST and in case of special category states such as in the Northeast, the exemption limit will be doubled to Rs 20 lakh, the government will have to forego Rs 5,200 crore on an annual basis. Interestingly, the long-standing demand of simplifying the process of computing and filing taxes has been taken care of. Those registered under the Composition Scheme will now need to pay a fixed GST rate on total sales and file returns only once a year. The government’s urgency is palpable. The MSME sector contributes 50 per cent to the manufacturing sector and offers employment to a huge army of labourers. Given that there is job scarcity, a robust MSME sector can offer livelihoods to millions.