The indirect tax reform is scheduled to be implemented from July 1, 2017 and is likely to cover over six million businesses under the GST net. Most of these people come from the SME community who are also key contributors to economic growth. These businesses suffer from uneven cash flows but are largely compliant. If availability of input tax credit is linked to payment of tax by their supplier, it will worsen the situation of these small businesses, the traders body CAIT said in a statement.
Speaking on the concern, Praveen Khandelwal, Secretary General of the Confederation of All India Traders (CAIT) said, “We are happy that the GSTC has cleared the way for the new law to get implemented. The trading community and other small businesses will benefit from the single tax regime undoubtedly. However, the provisions in the law to do with input tax credit availability if not corrected will be detrimental to their survival. On behalf of the entire trading community, we urge the Finance Minister to remove this roadblock so that GST can be a great law for all.“
CAIT National President BC Bhartia said that input credit is the heart and soul of GST. Therefore, its smooth passage will encourage more & more traders to comply with the law efficiently.
Bharat Goenka, MD, Tally Solutions said, “There is no doubt that GST will be one of the great levellers in the market, and open out the Indian market for the businessman. There are however certain provisions in the model GST law that will destabilize the SME community in the country. These provisions to do with ‘input tax credit available to buyer only if supplier has paid tax inside a given window’ and the even more frightening provision of the Government intending to make public a ‘Compliance Rating’ for all businesses will worsen their cash flow problems which are already uneven in nature and drive them to closure.“
“There is a dire need to delink payment with the availability of input credit and GST is capable of providing that because it brings a lot of transparency being technology led thus giving tremendous security and protection against tax evasion,” he added.
Under proposed GST law, input credit against the taxes paid by the purchaser can be availed only if the seller deposits the said tax with the government treasury.
In the event of non-compliance at the end of seller, it is the purchaser who will be denied input credit.
Source: WebIndia123