GST is biggest tax reforms of the country post independence, and yet a month after its’ introduction, Small and Medium Enterprises (SME) which are the biggest job-creators in India, are struggling to cope up with these changes. India has about 3 million SME, which contributes to 50% of the industrial output and also 42% of India’s total exports. One-third of this mass has not registered for GST when Aug 20 was the deadline for registration. The problem is said to be lack of understanding about GSTN (goods and services tax network) among the SME.
Due steps have been taken to understand the impact of GST on SME, Pahle India Foundation and Yes Bank jointly, organized a seminar in New Delhi based on the impact of GST on these enterprises. Where Experts from the Institute of Chartered Accountancy (ICAI), Logistics department, Tax Advisory and Small scale manufacturers came along to discuss various issues right after the implementation of the GST related to manufacturing units of the country. The highlighted points from the discussion are, from the tax advisory: Soon payment of tax would be 100 percent digitized and compliance automation would be implemented to ease the SME entrepreneurs for the payment of the GST; the logistics department got a positive feedback from the transport sector that, with the execution of GST, the transporters saved approximately four hours of time as they could avoid paying taxes while commutation.
The difference in the calculation of GST and tax system earlier also creates a big impact. under previous tax calculation a central excise duty of 12% was charged along with 12.5% VAT, and now CGST of 12% and SGST of 8% is charged.
The tax burden of around 60% SME came to rest as the registration for GST is to be done only by the business with a turnover of 20 lakhs (10 lakhs, special category states) or more, which for VAT was to be done by the business with a turnover of 5 lakhs or more.
Accepting the changes are being tough for the SME but educating one self on the GST changes would be worthy of being well equipped for the future troubles.