Various sources have revealed that a large chunk of SME business owners have not yet come onboard; and, experts suspect the cost of complying with GST might be a big deterrent.
“This will make it much easier for SME owners to come into the main taxation bracket but the minimum cost required for compliance might come to Rs 1 lakh per annum and any business unable to afford this sum will not be able to become a part of this,” remarked Foundation for MSME Clusters, Executive Director, Mukhesh Gulati.
The GST Council, headed by Finance Minister Arun Jaitley, is set to announce the final rates as well the commodities which will fall under GST on May 18 and 19 in Srinagar. It is only then that the taxation experts will be able to plan better.
“While the rates are pretty much decided, the products which will fall under various categories are yet to be announced,” said FICCI – CMSME, President, Sanjay Bhatia.
The unpreparedness of the businesses for GST is a big cause for worry and with a substantial number of SMEs without any digital presence or even access to creating one is a major hurdle. Given that there is no provision for filing physical returns under GST, experts insisted that the SME owners must invest in technology.
“There are several cloud-based applications that those companies which do not want to invest in computers can access. However, it is time to invest in technology. People should have basic technology in place because there is no provision for physical compliance and not sure if it is even going to be introduced in future. Besides, it is not just about compliance cost but the buyers can also claim input credit on their purchases,” said Shukla.
Not just tax collector but tax inspector, too
“Filing my own tax is not the only issue. In order to claim Input Credits, I shall have to ensure that all my suppliers have also filed their own returns to make sure that my earnings do not get impacted. So, essentially I will be acting not just as a tax collector on behalf of the government but also as an inspector,” said Chawla.
Apart from that, the need to register in multiple cities for a pan-city business or service provider is another cause of confusion. “Businesses need to register at the point of delivery and not at the point of origin, that is the change under GST,” Chawla pointed out.
With the rates announcement expected next week, some of the confusion is expected to be resolved. However, if the government manages to keep its deadline this time, the business owners will be left with less than seven weeks to understand and register their businesses under the new regime.