Where the big businesses are continuously appreciating the efforts done by Modi government, the small businesses are sharing another story of discontent. As it has been more than five months and still GST is the blockage for many small and medium enterprises, they are not in a good mood with GST implementation.
The GST implementation on July 1 was the biggest tax reform ever in India since independence. As GST has subsumed all the other taxes and transform into a common market, the aim is so prominent as it has scaled up efficiency and reduced corruption.
Modi government assured to burden off small and medium business, as stated by the PM Modi in November that regarding this a committee will pay attention to the issues. Here is the complete study on the GST-related issues which are faced by SMEs.
Lack Of Guidelines
One of the most common issues with new indirect tax being faced by SMEs is the lack of clear guidelines from the side of Union government. Aashna Singh, co-founder of the OLIO Stories mentioned in a statement, “GST has been an added impediment. Not only because of an increase in tax rates but because of how confusing the rollout was and its shoddy implementation. Our regular chartered accountant couldn’t make sense of it.”
It became further confusing for some businesses that are not clearly added to new rates.
Sohail Arora, founder, and director of Krunk said, “They have clearly mentioned GST rates for movie tickets and classical music performances but haven’t clarified the same for other kinds of music acts.” due to this, he mentioned his industry is quite bewildered.
Read Also : Why Small Scale Industries Require Relaxation From GST?
For businesses still suffering from the impact of demonetization, the growth of Krunk affected whereas OLIO faced continuous three months of weak sales. But even after five months of GST rollout, the complexities didn’t wash out.
Different Slab Under GST:
According to the businesses, the GST objective is ‘one nation, one tax’ which is far away from this approach. Kaushal Dugar, founder of Teabox said, “Separate registrations and separate returns have to be done for separate states where business is established.”
Furthermore, the expected number of annual filing has surged from 13 to 37. Kaushal Dugar further said, “It would be much better if we can combine all GST returns into a single returns structure.”
Higher GST Rates:
Clothing that is priced above Rs. 1,000 including most of the branded clothes in the competitive retail market in India attracts 12% GST which was 7% previously. OLIO declared to bear the additional cost rather than burdening it to customers, Aashna Singh explained, “because, in this price-sensitive market, even a few 100 rupees could affect our sales.”
The service sector of India levied 18% of GST than previous 15%.
Arora mentioned in a statement, “The worst part is if you are late in paying GST, they add a 200 rupee [$3.10] daily penalty charge” and further said “I find this ridiculous given when the government has to refund income tax returns at year-end, they take their own sweet time, often three to six months.”
GST Wants More Registration:
Many businesses, for example, OLIO depends on a platform such as MailChimp, Shopify, and Facebook to deal with international customers. But supplying services to not GST-registered businesses means that you are responsible to pay tax on their behalf.
Although companies can later claim those fees from the government, initially paying the money obviously impacts working capital of companies.
She further said, “The government is also strong-arming us to disassociate from small local vendors that aren’t registered, so we had to look for more established vendors for small matters, such as fabric dyeing and buttons, which increased costs.”
