Quarterly GST return may dent SMEs’ businesses

Vijay C Roy

Tribune News Service

Chandigarh, October 18

The Central government recently allowed small traders and businessmen having turnover of up to Rs 1.5 crore to file GST return quarterly instead of monthly in order to bring simplicity and reduce compliance cost for small taxpayers.

Industrialists feel while this move would ease the compliance for the SMEs, they apprehend it may affect adversely and they could suffer business losses.

Industrialists and tax consultants say the repercussions of this move will be felt later (in about six months) and if corrective steps are not taken, it can prove death knell for small industries having a turnover of up to Rs 1.5 crore.

The small taxpayers with turnover up to Rs 1.5 crore constitute 90% of taxpayers’ base but pay only 5-6% of the total tax.

“A majority of manufacturers in small, medium and large category procures finished goods from small manufacturers having turnover of less than Rs 1.5 crore and later they (buyers) claim input tax credit in their monthly return. Since these small players will file quarterly returns now, the accounts of buyers will be settled after three months only and if there is any discrepancy, it will lead to further delay. So, small, medium and large manufacturers will gradually shift to bigger manufacturers,” said Ashwani Kohli, senior vice-president, Punjab Chamber of Small Exporters.

The industry feels that if large manufacturers buy components from industries having turnover greater than Rs 1.5 crore, they will get input tax credit refund in one and a half months as accounts are settled as soon as they file their returns.

Echoing similar sentiments, Mastan Singh Chambyal, a chartered accountant, said, “Though buyers can claim input tax credit from suppliers having turnover of up to Rs 1.5 crore on a provisional basis after filing their monthly returns, their accounts will be settled only after the suppliers file their quarterly returns. Further, if any discrepancy arises, the buyers will have to wait for few months. So the buyers will shift to suppliers in the organised sector having turnover of over Rs 1.5 crore and file monthly return.”