Page 6 - MSME April-May 2017
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Feature consumption, which in turn means more between the manufacturer, retailer and production thereby helping in the growth service supplier; of the industries. This will create India as a (ii) It is expected that a relatively large segment ”Manufacturing hub”. of small retailers will be either exempted from (B) Ease of Doing Business tax or will suffer very low tax rates under a compounding scheme- purchases from such (i) Simpler tax regime with fewer exemptions; entities will cost less for the consumers; (ii) Reductions in the multiplicity of taxes that are (iii) Average tax burden on companies is at present governing our indirect tax system likely to come down which is expected to leading to simplification and uniformity; reduce prices and lower prices mean more consumption. (iii) Reduction in compliance costs - No multiple record keeping for a variety of taxes - so lesser Opportunities for MSMEs investment of resources and manpower in MSMEs have a major presence in the Indian maintaining records; economy contributing to 37.54 percent of India’s (iv) Simplified and automated procedures for GDP. The share of MSME manufacturing output various processes such as registration, in the total manufacturing output of the country is returns, refunds, tax payments, etc; to the tune of 37.33 % as per the latest available information. Hence, GST will have a major impact (v) All interaction to be through the common on the working of the MSME units. It will pose GSTN portal- so less public interface between significant opportunities to these units, which form the taxpayer and the tax administration; a major backbone of the country’s economy. (vi) Will improve environment of compliance as challenges for MSMEs all returns to be filed online, input credits to be verified online, encouraging more paper A sizeable portion of MSMEs are of the trail of transactions; opinion that GST is not all good for the sector and their fears may not be totally vacuous. The (vii) Common procedures for registration of tax neutrality that the MSMEs enjoy may be one taxpayers, refund of taxes, uniform formats of the prominent benefits. However, reduction of tax return, common tax base, common in duty threshold is one of the key concerns system of classification of goods and services that have led them to be wary of the GST bill. will lend greater certainty to taxation system; Under the existing excise tax, no duty is paid by a manufacturer having a turnover of less than (viii) Timelines to be provided for important rupees 1.50 crore. But, post GST implementation; activities like obtaining registration, refunds, the exemption limit will get significantly lowered. etc; During a speech at a news conference, Finance Minister opined that the limit can be as low as (ix) Electronic matching of input tax credits all- Rs. 25 lakh. As a result, a large number of MSMEs across India thus making the process more and startups will be mandated to come under transparent and accountable. the tax net and will have to pay a large chunk of (c) Benefit to consumers: their earnings towards tax. Furthermore, there are other flipsides to the proposed tax neutrality. GST (i) Final price of goods is expected to be lower regime won’t differentiate between luxury goods due to seamless flow of input tax credit and normal goods; this will hit hard the SMEs in 4 Laghu Udyog Samachar
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