A group of ministers will prepare a report after hearing all the problems of MSMEs including tax refunds, the council said in its 29th meeting in New Delhi.
The Goods and Services Tax (GST) Council headed by Finance Minister Piyush Goyal approved setting up of a group of ministers (GoM) to tackle taxation related issues faced by micro, small and medium enterprises (MSMEs). It has also decided to incentivise digital transactions by giving 20 percent cashback on the tax paid to users of RuPay, and UPI platforms on a pilot basis.
The GoM, headed by Minister of State (MoS) for Finance Shiv Pratap Shukla, is expected to submit its report in the next six weeks on tax issues faced by MSMEs. Delhi Finance Minister Manish Sisodia, Assam FM Himanta Biswa Sarma, Bihar deputy Chief Minister Sushil Modi, among others, will be part of the panel.
A law committee comprising bureaucrats from states and the Centre will be looking at law related issues that MSMEs are dealing with. Similarly, a fitment committee, comprising senior government officials will consider proposals related to rate cut.
“All proposals will be reviewed by the ministerial panel in consultation with the law review committee and fitment committee,” Goyal said.
Punjab Finance Minister Manpreet Singh Badal said that the report will focus on enabling industries to be more competitive. It will try to find out the processes that are destabilising smaller players, he said and added that small companies have been bearing losses of up to 300 percent.
In its 29th meeting held on August 4, the Council considered all aspects of GST, while focussing on laws, simplification of the policy, reducing compliance burden and technology-related issues affecting MSMEs.
“There were concerns about MSME sector ever since GST was rolled out because in the earlier excise and service tax regime the businesses with (annual) turnover of more than Rs 1.5 crore were treated differently, while those of less than Rs 1.5 crore differently. There is big business who give more taxes, but then there are small businesses who are large in number, who gives employment. Both have to be given importance…with this, MSMEs will get the required support,” said Manish Sisodia.
The next GST Council meeting will be held on September 28 and 29 in Goa.
West Bengal FM Amit Mitra, who was also present at the meeting said it is estimated that government had to bear revenue losses of Rs 43,000 crore during the April-June quarter.
However, referring to the cut in GST on around 80 goods a senior official government said that rate cut may not happen for the time being as there are revenue concerns. “The view was that now GST Council should adopt RBI’s terminology of a pause in rate cut,” the official noted.
Revenues from GST in April-June was at Rs 2.86 lakh crore, as compared to an estimate of Rs 3.36 lakh crore, according to monthly data released by the government.
Incentivising digital transactions
The Council approved incentives for digital payments, with a broader idea to promote a cashless economy.
Payments made using instant real-time payment system Unified Payments Interface (UPI) and RuPay cards will get a cashback of 20 percent of the GST amount, Goyal said, adding the cashback will be capped at Rs 100.
The pilot programme will be implemented by National Payments Corporation of India (NCPI) and can be introduced by any state that is willing to run it voluntarily. Tamil Nadu, Assam, Maharashtra and Bihar are some of the states that are keen on implementing the pilot project.
The Centre and states will have to bear a loss of Rs 1,000 crore annually, towards giving sops for digital payments.
“…It remains to be seen how many states are interested in implementing the scheme and what is the monetary limit fixed on the benefit. Besides, the Banks and the Government will be required to put in place an appropriate software and infrastructure support to facilitate the cashback scheme,” said Abhishek A Rastogi, Partner, Khaitan.