GST Might Soon Be More Flexible For SME Sector

Firms and Businesses with an annual turnover of less than Rs 20 lakh could be exempt from GST Compliance. In a major development, small traders may now need not be registered under GST to supply goods to e-commerce giants like Amazon and Flipkart. The new GST provisions will also be applicable to small firms making inter-state supplies. The decision may come after the scheduled 29th GST council meeting which would be presided by the Interim Finance Minister Piyush Goyal. The prime agenda of the meeting would be the demonetization hit  SME sector. Reportedly, the SME sector was one of the most affected by the central government’s demonetization move in 2016.

Before the meeting, field officers of the Central Board of Indirect Taxes and Customs have been tasked to prepare the list of grievances and suggestions of small businesses. Reportedly, Section 24 Of the CGST Act mandates registration companies with an annual turnover below Rs 20 lakh. These also subsume small and medium level suppliers to e-commerce firms.

Some key points of consideration for the August 4 GST Council meeting could be:

• Challenges faced by the demonetization-hit SME sector.
• Easing GST Compliances on the SME Sector currently suffering from capital crunch and sluggish demand

Reportedly, the GST Council has received 80-90 suggestions for making GST more taxpayer in a friendly way. Upon consideration, the centre has shortlisted 12-15 of them. Some of these include:

• Exempting firms with annual turnover of up to Rs 1.5 crore from paying GST
• Reducing rates on raw materials or inputs.

Read Also: Revised GST Slab Rates in India After the GST Council Meeting

Chandrakant Salunkhe, founder, and president of the SME Chamber of India said,”Small firms with annual turnover of up to Rs 5 crore should be out of the GST ambit. We also demand more time for depositing tax. From one month it should be made a quarter”.
Following the requests from states and other stakeholders, the central government might decide to make the GST regime more flexible. And the first step towards this would be to exempt those small businesses which sell through e-commerce websites like Flipkart. However, all such SMEs must have annual turnover below Rs 20 lakh.