No. of views : (5724)
More incentives for GST compliant MSME firms
Posted on: 24/Nov/2017 12:13:25 PM
All the micro, small and medium enterprises that abide by the GST (Goods and Services Tax) requirements are set to receive more incentives from the hands of Finance Ministry such as loan at slashed rates so as to reward the adopters and also motivate the others who have still not adopted the regimen.
Speaking about this, a senior government official said the ministry considers a number of ideas of which this is one.
Since the launch of GST, the MSMEs have been protesting against it. Most of these companies function in the informal bandwagon, and many of them pay just a meagre of what they are bound to. The newly introduced tax regime has badly hit them. Say, for example, those MSME companies that supply to large companies were instructed to abide by the newly introduced tax regime failing which the giant players would not be able to claim input tax credit.
With this incentive idea by the Finance Ministry, the cash-drive unorganized sector shall get streamlined and enticed towards the formal sector which altogether is the ultimate aim of Narendra Modi administration.
One of the major hurdles with the MSME business model is the resistive nature of accessing credit, particularly as a lot of them lag in having collaterals as immovable assets.
Taking under consideration the potential of employment with the MSME, the GST council – the federal indirect tax body of Finance Ministry is finding ways to rationalize tax rates and need for compliance to the same.
A complete registry of all immovable assets with the MSME will be soon created. With this, the banks will be able to identify whether these assents are pledged elsewhere before finalizing any kind of loan to the company.
Mr. Praveen Khandelwal, the Secretary General of Confederation of All India Traders (CAIT) said only a meagre of 5 percent of the MSME sector has access to formal finance from banks. This accounts to Rs 40 trillion per year. He added that the MSME sector relies on the other sources like private money lenders or financing firms. MSME is the backbone of economy, and the sector requires national policy for stimulating growth, he added.
Rationalization and simplification of GST shall keep continuing, said another official from the finance ministry. This however will be based on the tax revenue that comes in, said a senior official.
