Anxiety over GST forces SMEs, start-ups to dial for help

The Hindu Business Line By OUR BUREAU January 26

Ahmedabad, January 26: As the Union Finance Ministry gears itself up for the final roll-out of the Goods and Services Tax from July, small businessmen and entrepreneurs are getting anxious over how to cope with the post-roll-out scenario.

A national toll-free GST helpline (1800 103 9271), set up by Jaipur-based KDK Softwares, has received over 10,000 calls on GST enrolment and its impact on businesses.

A study of the helpline revealed that over 70 per cent calls received were regarding GST rates and whether this will be a beneficial tax structure to small businesses. As per the Ministry for Micro, Small and Medium Enterprises, 45 per cent of the country’s industrial output is produced by the SME sector for national and international demand.

Mohit Bhambani, CEO, KDK Softwares, said: “With the demonetisation and the upcoming GST regime, SMEs and start-ups are facing a very challenging economic environment.”

The threshold level in the proposed GST bill is Rs. 10 lakh in general and Rs. 5 lakh for the North-Eastern States. It is Rs. 1.5 crore in the current central excise law and does not cover the chunk of SMEs that are exempted in the current tax structure.

“This (reduced threshold) will significantly impact SMEs’ working capital. As the threshold is low, most SMEs will have to pay a substantial portion of their capital towards tax in future,” Bhambani said, adding that about 80 per cent of the calls received were from organisations with a business turnover of less than Rs. 1 crore.

“We found most of them were worried on the GST rates and how it will be levied on supply in case a company directly supplys products to end customers. Since it will not be available for input credit, it will be increasing the cost of production, which may not be in favour of such SMEs.”

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