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The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

Micro and small-scale units seek relaxations in GST norms

The micro and small-scale units here have sought modifications and relaxations in GST norms to facilitate ease of doing business and better fund flow for the industries.
The industrial associations submitted the demands to Minister for Fisheries and Personnel and Administrative Reforms D. Jayakumar.
According to Coimbatore District Small Industries Association president R. Ramamurthy, there should be time-bound approval of refund applications submitted by the industries through the GST portal and the refund amount should be transferred to the tax payers’ bank accounts directly. The minimum limit of Rs. 1 lakh for exemption from e-way bill should be increased to Rs. 2 lakh and the 10 km limit specified should be reconsidered. It should be fixed based on industrialisation of each city.
‘Biggest challenge’
Mr. Ramamurthy added that the GSTR 2 was the biggest challenge for the MSMEs.
The units should be exempted from matching of invoices in GSTR 2. Similarly, the reverse charge mechanism has been deferred. The Government should stop it completely. On the composition scheme, he said job orders and service industries should be included in it. The MSMEs take up both, manufacturing for direct orders and job work. They will be able to avail of the composition scheme only when the job works are also included.
The Southern India Engineering Manufacturers’ Association president V. Krishnakumar said that in pump industry, several manufacturing processes are outsourced to job workers.
Since it is treated as a service, manufacturers are unable to claim refund of the GST paid for job work.
Nearly 30 % of the refund claim is due to job work in this sector and it cannot be claimed as refund.
This will lead to either reduction in outsourcing of jobs or the price of the pumps will increase. Further, the GST rate for engineering job work should be reduced to 5 % from thr 18 %.
S. Ravikumar, president of Coimbatore Tirupur District Micro and Cottage Entrepreneurs Association, said that though the GST exempts industries with less than Rs. 20 lakh annual turnover from registration, those who give the job orders want the smaller units to register as they are subjected to reverse charge mechanism.
The micro units face 30 % to 40 % production loss for a year now because of this issue.
The micro units should get complete exemption from GST. The micro units get payments for job works after 90 or 120 days. So they face financial constraints and sill have to pay the GST on time. They should be exempted from late payment penalty, he said.