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Last Updated : Sep 25, 2018 01:24 PM IST | Source: Moneycontrol.com

MSMEs may not receive additional GST benefits before 2019 general elections: Report

The government feels rolling out such benefits closer to the 2019 general elections could create technical hassles

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Micro, small and medium enterprises (MSMEs) may not receive more benefits under the Goods & Services Tax (GST) regime before the 2019 general elections as there has been a consistent fall in collections, The Financial Express reported.

The GST structure might not see any major change and even the new return filing system may not be implemented until the Lok Sabha polls are concluded and the new government assumes office, the report said.

“Tax officials and the political dispensation are wary of implementing new measures close to general elections. Apart from revenue considerations, we also have to factor in the income tax-related issues that may arise after implementation,” a source told the paper.

The government had earlier proposed additional sops to MSMEs. It, however, feels that the rolling out such benefits closer to elections could create technical hassles. The inconvenience may, in turn, offset political benefit the National Democratic Alliance (NDA) government could garner through tax sops for small businesses.

The Centre has also decided to stick to its FY19 fiscal deficit target of 3.3 percent of GDP. Amid declining GST revenues, offering additional benefits to MSMEs may hurt government's fiscal deficit target.

Revenue collection from GST declined to Rs 93,960 crore in August from Rs 96,483 crore in July, the lowest in the current fiscal.

The decline may have been due to a rate cut on several items that was announced to provide relief to MSMEs and customers. On July 21, the GST Council had cut rates on more than 80 items across various tax slabs. The rate cut was effective from July 27.

The GST Council had set-up a Group of Ministers (GoM) on August 4 to formulate a plan for further relief to MSMEs, but the panel hasn’t met even once, the report said. The GoM is unlikely to submit an interim report during the next GST Council meeting scheduled on September 28, the report said.

The government had earlier decided to provide MSMEs additional relief as small taxpayers, who were exempt from excise duty in the pre-GST regime, are now liable to pay excise duty and Value Added Tax. The move is said to have taken away the competitive advantage from these enterprises. The sops were aimed at reducing tax burden as well as giving these firms a bit of a competitive advantage.
First Published on Sep 25, 2018 01:24 pm
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