Slash GST rate to 5 per cent, Ranipet units urge FM

RANIPET: Association president R Amirthakatesan told this reporter, “Though large units are supposed to make payments to the MSMEs within 45 days as per RBI guidelines, they don’t stick to the deadline. Sometimes, they keep the cheque ready within the due date but despatch them late.”

This in turn has been affecting the turnover of small units, he said and added that this problem could be resolved if the present GST rate of 12% was slashed to 5% like it has been done for the garment industry. The high rates affected MSME’s working capital utilisation as 60% to 72% of working capital goes for GST payment.

Echoing similar views, association secretary L Gandhijothi said, “This was also taking toll on our turnover and our ability to repay various other loans.”

Allaying the fears of the government that reduced GST rates would affect tax collections, Gandhijothi claimed, “Reduced rates will only lead to rise in turnover, which will have a cascading effect and result in an increase in the GST remittance.”

The present recession has slowed down payment for engineering job works, stated officials. In order to overcome this impasse, they felt that the GST slabs for MSME units should be increased from Rs 40 lakh to Rs 1 crore and extend the payment period from one month to three months.

“Recession has ensured that suppliers and buyers pay manufacturers only after three to four months and hence to overcome this, extension of the GST payment period and an increase in GST limit are essential,” Gandhijothi added.

Amirthakatesan added that leather processing units in Ranipet would benefit if common effluent treatment plants were granted total GST exemption as was provided for common bio-medical waste treatment companies.