Business

GST is gathering steam but glitches remain for SMEs

The Goods and Service Tax (GST) has had good impact on the manufacturing industry in India. Especially in the pump industry where there are lots of players in the unorganised sector, it has forced many to move into the organised sector.

Starting out a bit rockily, GST implementation has impacted the manufacturing industry favourably by bringing in a unified and consistent tax structure. Businesses that were facing slowdowns in the early days its roll-out, are now picking up pace along with several other sectors experiencing the benefits of a common tax system. In many cases, it has led to input costs becoming lower. It has also reduced the transit time of transport thus leading to reduced costs and time.

Another issue manufacturers faced was the cost they incurred during the transportation of their goods. Multiple checkpoint, permits meant an additional expenditure on the part of the manufacturer. This was not only was expensive but also extremely time-consuming. Any delays from the manufacturers’ end meant added expense. The GST system has helped providing a smooth and hassle-free flow of goods within the country by removing multiple checkpoints and permits at State border checkpoints. This move has helped reduce the logistics time, resulting in faster delivery of goods.

GST, being a new system, it will require time to stabilise, akin to many other countries. that too took time to stabilise. The government has been proactive about sorting out the issues to ensure stability. We hope to see the government taking further initiatives to simplify the existing GST system.

There are, however, a few issues that need to be solved right away. The government has not extended the prescribed due date of GSTR 3B for September 2018, which is supposed to incorporate all the reconciliation items regarding turnover, input and output tax liability for the financial year 2017-18.

Many SMEs and MSMEs are not ready for this yet and hence, an extension is required till December 31, 2018. The due date for GSTR 9 and GSTR 9C needs extension from December 31, 2018 to March 31, 2019 as many SMEs and MSMEs have not yet reconciled the GSTR 2A. GSTR 9 requires HSN codes for all the supplies and many SME/MSME suppliers don’t furnish the HSN code and the process would come to a standstill if this becomes compulsory. Hence, these details need to be eliminated in GSTR9. Export refunds are still not fully automated, and support is required from the Centre for SMEs and MSMEs who have not done the GSTR 2A reconciliation. Because of this, a large sum of money, which is to be refunded, is stuck.

GST audit

The GST audit requires input ITC details, expense category-wise, which is very tedious and needs manual work. Hence, industry recommends that this be eliminated. The High Seas Sale — GST Act has been amended and passed in Parliament but many States are yet to pass this. Therefore, notification on this is delayed and this needs to be addressed. Companies, affected by the inverted duty structure and which have filed the Tran 1 for the opening balance carry forward have not yet got the refund.

This is truly impacting the working capital of these companies. It would be helpful if the government intervened and sorted this out at the earliest. Also, for multiple orders, one invoice and one e-way bill is still an issue to be sorted out. If fixed, this will eliminate a lot of paper work.

Overall, GST has streamlined the system into a ‘One State - One nation’ – especially facilitating hassle free logistics movement and less paper work. By merging all state and central taxes together and making the filing of all the returns on line, the transparency and productivity has also improved significantly. The time spent both by companies and the government on assessments will come down once the system is fully stable as most of the data will be reconciled online between the parties.

(The author is chairman, job creation sub-committee, CII Southern Region and MD, Grundfos Pumps India Pvt. Ltd.)

Clarification: The facts mentioned in the article with respect to the extension of due date for GST Returns were relevant at the time when the article was written. The notification of the Government in extending the deadline was a subsequent development.

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Printable version | Oct 24, 2020 8:37:44 AM | https://www.thehindu.com/business/gst-is-gathering-steam-but-glitches-remain-for-smes/article25814360.ece

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