Goods and Services Tax (GST) has been one of the major reforms in India. This tax has levied many indirect taxes on various Micro, Small and Medium Enterprises (MSMEs) by State and Centre Government, including VAT, service tax and excise. However, there are both pros and cons of implying GST on MSMEs:
- The major advantage of GST benefits according to 2019 Interim Budget is that there is an extension of GST exemption limit. This exemption limit has increased from INR 20 Lakh to INR 40 Lakh. This means there is no need to register for GST anymore if the MSMEs have a yearly turnover of less than INR 40 Lakh.
- The companies that offer goods and services with a yearly turnover of less than INR 50 Lakh may enrol for the new Composition scheme and the GST rate has been revised for this scheme for about 6%.
- There is also an online portal for MSMEs to avail for a loan amount of up to INR 1 crore. The process takes place within an hour. This is done to provide boost funds access for MSMEs.
Additional Read: Changes in GST could Complicate Tax System but Boost SMEs
- The major con of GST on MSMEs is that there is a lack of awareness about this tax in many sectors or industries. Many enterprises are still not confident to enrol in for GST online.
- No announcement has been made about providing incentives to domestic manufacturing in the budget 2019.
Additional Read: GST Return Filing for the First Time: Key Points to Know