SMEs want GST implementation as soon as new govt formed

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Saurabh Gupta | 11 Mar, 2014
Most of small and medium entrepreneurs (SMEs), with a ray of hope in their eyes, are expecting that the Goods and Service Tax (GST), the proposed tax reform that seeks to replace all the indirect taxes like central sales tax, state-level sales tax, excise duty, service tax and value-added tax (VAT) with a single and uniform tax rate across the country, will come to reality as the new government will be formed after the 2014 general elections.

Efforts to implement GST stretched for over seven years and has missed several deadlines till now.

Pointing out the pain points of SMEs, MD of Impex Appliances Ltd., Dinesh Garg told SME Times, "We are expecting that there should be a common tax system, which is batter for us. Because right now we have different taxes and if a common tax system will be there it will definitely help us more."

"We support GST and it should be implemented. Presently there are different types of taxes in different states, which leads to a different pricing in states and increasing competition in the domestic market. So from the new government we are expecting that GST must be implemented," he added.

It is an irony that any small or big manufacturer, who is sourcing his raw materials from one state and his clients too were mostly in the same state, when he moved raw materials from one sate to other, he had to pay 2 percent central sales tax (CST) on it. When he moved the finished product back into his state, he had to pay another 2 percent CST on it.

The GST is a tax reform that seeks to create one common market for all goods and services in India. It has long been delayed due to differences between the centre and states over its design and issue of central sales tax compensation.

Another SME owner from Chandigarh, Chairman & MD of Allengers Medical system Ltd., Suresh Sharma said, "We fully support the model of GST. It should have been implemented long back, we were expecting it about three years back. So from the new government, we expect that they implement it immediately."

The main point of concern for the states is compensation for the perceived loss of revenues because of the subsuming of several state taxes into the GST.

Moreover, Sharad Jaipuria, President, PHD Chamber of Commerce and Industry in his suggestions note to Political Parties for their forthcoming election manifestos has stressed to simplify and rationalize the complex tax structure.

Jaipuria said that implementation of GST would be critical to remove the cascading impact of indirect taxes on economy and to create a common market across the country.

Experts says that GST can be implemented only through constitutional amendment. It will require approval of at least two-thirds of the members present and voting in each houses of the Parliament. It must also be ratified by the legislatures of at least half of the states.

Now every political party is considering the issue of implementation of GST and SMEs too know that the implementation of GST will happen only after a new government comes to power after the elections in April.

As per the Fourth All India Census of the Micro, Small and Medium Enterprises, total number of Enterprises of the MSME are 361.76 Lakh, which give total Employment to 805.24 Lakh people. MSME sector contributes around 9 percent of GDP. MSME sector accounts for around 30 percent of the total exports and around 45 percent of the manufacturing output.

"We expect that new government will give a lot of support to SMEs. We are expecting new insentives, new policies for SMEs because at present we are not comfortable with present policies," Suresh Sharma said.

Garg also said that they want there business to grow. "Right now there is little bit of stagnation in the industry. So we are expecting that the new government will give better opportunities, better credit schemes, loan at lower interest rate and better technologies for SMEs," he added.