GST council has increased threshold limit\nfrom 10 lakh to 20 lakh and from 4 lakh to 10 lakh for North-eastern states) <\/em><\/strong>Under\nthis reform, any service provider or retailer subject to the tax levy. In the\npresent central excise law threshold is Rs.1.5 crore. The reduction will significantly\nimpact the MSME’s working capital. <\/p>\n\n\n\nFor example, the manufacturer who trades\ntoday at Rs. 25 lakhs without any tax levy will be expected to pay GST\npost-implementation only. As threshold is low, most MSMEs are now exempted and\nhave to pay a chunk of their capital towards tax in future. <\/p>\n\n\n\n
Selective Tax Levying<\/h3>\n\n\n\n
GST cannot be applicable to Alcoholic\nliquor for human consumption and Petroleum-based businesses, which creates a\nfurther gap and does not support unified market ideology of GST.<\/p>\n\n\n\n
The Burden of Higher Tax Rate for the Service Provider <\/h3>\n\n\n\n
The scenario in the service sector will\nimpact as the concept of Centralised Registration and each unit in various\nstates will have to take the separate registration. Therefore even if services\nare supplied by the company’s one Unit in State A to another Unit in State B,\nthen also taxes are payable.<\/p>\n\n\n\n
No tax Differentiation for Luxury Items & Services <\/h3>\n\n\n\n
The tax neutrality will not differentiate\nany luxury goods and normal good. The central and state government levy higher\ntaxes on the luxury goods and services. Under GST implementation, all goods and\nservices have to pay same tax, which will lead to rich becoming more richer and\npoor becoming poorer. This situation is not good for the MSMEs competing\nagainst large businesses.<\/p>\n\n\n\n
Excess Working Capital Requirement <\/h3>\n\n\n\n
Taxation of stock transfer can primarily\nimpact on working capital requirements. The quantum of impact varies depending\non stock turnaround time at warehouse, credit cycle to a customer, quantum of\nstock transfer, etc. The higher amount of Capital Requirement will increases\ninterest cost, which ultimately increases the price of Finished Goods.<\/p>\n\n\n\n
Realignment of Purchase & Supply Chain <\/h3>\n\n\n\n
The GST credit will not be available to a\ncompliant company if the vendor from whom MSME is purchasing goods does not show\na same in his return. Hence, sourcing strategies will change on account of GST credit\nmechanism. Also, there will be reconsideration of Supply Chain on account of taxation\nof Stock Transfers.<\/p>\n\n\n\n
Dual Control <\/h3>\n\n\n\n
In the GST Council Meeting, it was decided\nby the Ministry that those assesses having turnover of less than of 1.5 Crores\nwill be assessed by State Government, and existing Service Tax assesses,\nirrespective of turnover. It will be assessed by the Central Government as\nthere is lack of expertise with State Government in relation to Service Tax\nmatters. As a result of this, small traders dealing in both goods and services\nwill have dual administrative control both by Centre and State.<\/p>\n\n\n\n
Conclusion<\/h2>\n\n\n\n
It was concluded that the impact of GST under MSMEs sector could go both positive and negative ways. For existing enterprises, GST simplified the tax structure, unified the market thus improved among all operational efficiencies of MSME, to this point the unorganised MSMEs were growing quicker than the organised ones as a result of the minimisation. With GST in effect, it has made the taxation system transparent, thus making the entities liable for tax payment.<\/p>\n\n\n\n
Read our article<\/b>:MSMEs under Gujarat Industrial Policy 2020 : Strengthening the Pillars for Atmanirbhar Gujarat\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"MSME play a vital in the economic progress of the countries, so the implementation of GST under MSMEs has had an immense outcome on the continued existence in the market. Some enterprises found it helpful however majority visage problem in adopting it. The MSME sector of market has been deliberated as a chief development driver […]<\/p>\n","protected":false},"author":10,"featured_media":21636,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[1305],"acf":{"service_id":"71"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":10342,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21625"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=21625"}],"version-history":[{"count":16,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21625\/revisions"}],"predecessor-version":[{"id":24654,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21625\/revisions\/24654"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/21636"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=21625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=21625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=21625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"Positive](\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/The-positive-impacts-of-GST-under-MSMEs-are-as-follows.png\")
<\/figure><\/div>\n\n\n\n![\"Negative](\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/While-MSMEs-enjoys-the-tax-neutrality-however-there-are-some-negative-impacts-which-are-as-follows.png\")
<\/figure><\/div>\n\n\n\n