The Goods and Services Tax (GST) will boost the competitiveness of micro, small and medium enterprises (MSMEs), noted a recent joint study by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Ashvin Parekh Advisory Services (APAS).
“From a MSME perspective, GST will bring many positives compared to the current systems such as easy process of availing input credit, single point tax, elimination of cascading tax system, and simpler taxation,” said the study titled ‘Emerging Mantras for Bankers-Borrowers,’ jointly conducted by ASSOCHAM and APAS.
The report also said there is no doubt that GST is aimed to increase the taxpayer base and bring major MSMEs into its scope and would put some burden of compliance and associated costs to them. But eventually, it will turn these MSMEs more competitive with a level playing field between large enterprises and them.
It also highlighted that pros of GST in the MSME sector included improved MSME market expansion, lower logistical overheads, boon for MSMEs dealing in sales and services, unified market and purchase of capital goods.
The study also highlighted the cons of GST in the MSME sector – burden of lower threshold, no tax differentiation for luxury items and services, increase in cost of product, selective tax levying, burden of higher tax rate for service provider, excess working capital requirement, realignment of purchase and supply chain, dual control, high compliance burden and tax on advances, taxation under reverse charge for un-registered purchases, taxation on stock transfers and deemed supplies, time limit for return of goods sent on sale or return basis, condition of payment and filing of return for availing input tax credit and power to arrest and prosecution.
Source: Times of India