Goods and Services Tax – GST – By: – Ravi Kumar Somani – Dated:- 25-4-2017 Last Replied Date:- 25-4-2017 – Medium Small and Minor enterprises contributes approximately 37% of our Nations GDP. Any negative implication of GST on this segment can directly knock off the player from the competitive business market. This article tries to put forth various issues that this industry could face due upon passage GST. The article also try to provide the possible solution for the issues highlighted as explained below. 1) Low Basic Exemption Limit: Under Excise law, the SSI s enjoy the basic exemption limit up to ₹ 1.5 crore which itself has been continuing since long time even though inflation has led to increase in prices of various goods/ services over a period of time. Further, under GST, the basic exemption limit has been proposed to be reduced to a very low threshold limit of ₹ 20 lakhs. Further, in some cases of e-commerce, reverse charge, output inter-state supply activities th
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cation of this could lead to erosion of this sector and also bring monopolistic market of large players instead of competitive market. Therefore, it is suggested that Government must come up with some notification providing the relief in this regard which is in the best interest of this sector and supports its growth objective. 2) High Compliance burden: It is seen that GST law demands high compliance. Key compliance requirements are as under: Three returns be filed in each month for every state. Further, returns must be filed for TDS, ISD (if applicable). Also, one annual return with reconciliation statement has to be filed for every state; Registration must be taken in every state and there is no concept of centralised registration; Accounting needs to be timely updated and the same needs to be maintained state-wise to reconcile the taxation with accounts at state level; GST computations, liability calculation, credit availment etc. has to be done on monthly basis. In a small and med
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try and its contribution to the economy. 3) Taxation under reverse charge for un-registered purchases: In the GST bill, it is proposed that if any goods or services are supplied by a person who is unregistered and supplied to a registered person, then GST needs to be paid by the registered person under reverse charge as a recipient. Therefore, even if any small businesses who does not take registration and claim the basic exemption threshold then the person receiving goods or services from them need to pay GST under reverse charge. This provision shall have negative impact as businesses would not prefer to deal with unregistered persons and to take the additional burden of taxation under reverse charge. Therefore, this provision directly impacts the business of small sector negatively and virtually forces them to either register or to shut the business which was ideally not the principles guiding the existence of the GST taxation. 4) Taxation on stock Transfers and deemed supplies: Pre
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or return basis. However, in GST regime, the maximum time limit for the return of goods sent on sale or return basis is 6 months and if the same is not approved within the said time limit then the invoice needs to be issued and the goods shall be deemed to have been supplied since time of supply for payment of tax would arise. In various small scale industries like ready-made garment industry, the norm is to send goods to Consignment Sales Agents (CSA) and customers on a sale or return basis. The norm in such industries is that the CSAs / customers return the goods after the season is over. However, casting time-limit on return of goods would have negative impact on such sectors. Therefore, it is suggested to remove this provision and continue with the present practice of paying GST only once actual supply takes place. 6) Tax on Advances Advances received against supply of goods and/or services are taxable in GST regime. Collection of GST on advances would be cumbersome and requires hi
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T can be made only on receipt basis as prevalent in service tax for small individuals and partnership firms. This shall ease the compliance and cash flow burden. 7) Availability of Composition Levy Non-availability of composition scheme to those who are supplying services or making any supply of goods which are not leviable to tax under the Act or if any inter-state supply is made seems to be harsh on such person. Small services suppliers only shall be required to comply with the normal provisions of the law which could prove to be cumbersome for such suppliers. Further, small suppliers making few of the supplies not chargeable to tax while majority of supplies are taxable may find this provision an unnecessary burden on them. It is suggested that eligibility for composition scheme be based on the turnover during a particular financial year and be made available uniformly to all suppliers whether supplying goods or services or both. Alternatively, Sector specific composition schemes ma
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edit of appropriate Government in order to enable the purchaser to avail the input tax credit on such supply made may cause undue hardship to the assesses. It is suggested that the pre-conditions relating to payment of tax to the credit of Government and mandatory filing of return be deleted / removed and the same must be reconsidered and liberalized to enable the small sector to avail input tax credit of tax paid by them. Alternatively, if the Government believes that certain taxable persons in the unorganized sector may not deposit the collected tax to Government the concept of reverse charge be made applicable to them instead of denying/ delaying the credit based on the non-compliance by other party to the contract. 9) Power to Arrest & Prosecution: A Commissioner of CGST or SGST can authorize an arrest of a person if has reason to believe that the person has committed any offence punishable under the GST law. The person can be arrested even if such a person has not been issued
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