There is already a tense environment in the business world due to the GST and in this strategy, the fund flow as well as to ease business operation norms, the Tamil Nadu micro and small-scale units have requested modifications and relaxations in the current GST norms.
The Industrial Associations demands were submitted to Mr D. Jayakumar. While Mr R. Ramamurthy, President of Coimbatore District Small Industries Association, in his plea to D. Jayakumar stressed on the following GST leverages:
- E-Way Bill minimum exemption limit to be increased to ₹2 lakh.
- Reconsideration of the 10 km limit. Setting a variable limit depending upon the industrial development of the city.
- On time approval of refund applications and direct transfer of refund amount to the taxpayer’s bank account.
GST RoadBlocks
The plea stresses that GSTR 2 remains a major disruptor of smooth operations in the MSMEs.
Mr R. Ramamurthy demanded that the practice of invoice matching in GSTR 2 must be done away with along with the currently deferred Reverse Charge Mechanism. Further, he suggested that SMEs would better avail the composition scheme if and only if the scheme subsumes job works as well. Both job orders and service industry must be within the ambit of the Composition Scheme. The MSMEs take up both, manufacturing for direct orders and job work.
V. Krishnakumar, President of the Southern India Engineering Manufacturers’ Association, highlighted that many manufacturers outsource the process to job workers. And as it is considered as service under GST, refunds cannot be claimed on such arrangements. Reportedly, nearly 30% of refund claims are from job work in the sector. And present GST norms do not approve these refund claims. There are two possible outcomes if the current practice continues including reduced outsourcing of jobs or the Costlier pumps. To lessen the burden the Government must reduce GST on engineering job work from 18 % to 5 %.
Micro And Cottage Entrepreneurs Association say that although GST exempts small businesses/ firms with annual turnover less than ₹20 lakh, smaller units must register for GST as they ensure reverse charge mechanism.
- On a year on year basis, non-liability for RCM amounts to production loss in the range of 30-40%.
- Further, late payments put an unreasonable financial constraint on the smaller units as they have to comply to on time GST liabilities. Sometimes job works payments can take 90 or 120 days.
Read Also: Easy Guide of RCM Under Goods and Services Tax with All Aspects
Hence, a complete GST penalty exemption would be a welcome relief for the smaller/micro units.
