As the Union Finance Ministry gears itself up for the final rollout of the new uniform goods and services tax (GST) from July, the small businessmen and entrepreneurs are getting anxious about how to cope with the post-rollout scenario.
A National Toll Free GST Helpline (1800 103 9271) – set up by a Jaipur-based KDK Softwares, has received over 10,000 calls on GST enrollment and other queries where the impact on business post GST is the high times asked query on call.
Study of a national toll free GST helpline run by a well known taxation domain company, KDK Softwares, reveals that over 70 per cent calls received had a single concern on GST rates and whether this will be a beneficial tax structure to the small business.
As per the Ministry for Micro, Small and Medium Enterprises, 45 per cent of the country’s industrial output is produced by SME sector for national and international demand. Over 30 million SMEs of India is the next big thing that central government will have to take care for. SME sector contributes a lot in terms of its GDP share, Employment, Innovation etc.
Mohit Bhambani, CEO of KDK Softwares, says, “With the recent demonetisation and upcoming GST regime, SMEs and startups are facing a very challenging economic environment in addition to their experience of several highs and lows during the past five years.”
The threshold level in proposed GST bill is reduced to Rs. 10 lakh in general and Rs. 5 lakh for the North Eastern States which is Rs. 1.5 crore in the current central excise law and not covering the chunk of SMEs which are exempted in current tax structure.
This will significantly impact the SMEs’ working capital as since the threshold is low, most SMEs will have to pay high portion of their capital towards tax in future,” Bhambani said adding that about 80 per cent calls received were from the organization having a business turnover below Rs. 1 crore.
“We found most of them were worried on the GST rates and how it will be levied on supply in case a company is supplying products directly to the end customers. Since it will not be available for input credit, it will be increasing the cost of production which may not be in favour of such SMEs.”
