GST will make MSME firms more competitive: Assocham

The GST will boost the competitiveness of micro, small and medium enterprises (MSMEs), the Associated Chambers of Commerce and Industry of India (Assocham) said, citing its report on the unified pan-India indirect tax regime. “From an 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,” according to the Assocham and Ashvin Parekh Advisory Services (APAS) joint study titled Emerging Mantras for Bankers-Borrowers.

With the GST designed to increase the taxpayer base and bring more MSMEs into its scope, it would put some burden of compliance and associated costs to them, Assocham said.  “But eventually, it will turn these MSMEs more competitive with a level playing field between large enterprises and them,” it added.

The study listed the negative implications of the GST for MSMEs as being the lower threshold, no tax differentiation for luxury items and services, increase in product cost, selective tax levying, and higher tax rate for service provider.

Among other negatives it listed were excess working capital requirement, realignment of purchase and supply chain, dual control, high compliance burden and tax on advances and tax under reverse charge for un-registered purchases.

Considering that all compliance procedures will now only be online, MSMEs need not worry about interacting with department officers for carrying out these compliances, “which was earlier a cumbersome task. Furthermore, Indian MSMEs would be able to compete with foreign competition coming from cheap cost centers such as China, Philippines, and Bangladesh,” it said.

“The GST regime will usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganised to organised players,” the statement added.

Meanwhile, Ernst and Young has launched the “EY GST Helpdesk” free facility for small businesses, traders and entrepreneurs. “The business community can post their GST related query on EY India Tax Insights App, DigiGST website - www.ey.com/in/digigst and EY_India on Twitter,” a release here said.

“EY GST Helpdesk is driven by the largest pool of indirect tax professionals powered by over 800 GST practitioners across 14 cities,” it added.