GST teething issues still haunting MSMEs

Vijay C Roy

Tribune News Service

Chandigarh, March 4

It has been over two-and-a-half years now when the Goods and Services Tax (GST) was implemented. However, teething issues are still haunting micro, small and medium enterprises (MSMEs) across the country. According to the industry, thousands of notices have been served on the MSMEs in the northern region for late filing of GST returns for the fiscal 2017-18 and 2018-19.

However, the computation of interest for late filing has been done on gross GST and not on net GST payable, putting the MSMEs in a quandary.

Industry representatives said a circular has been issued by Special Secretary, Member, Central Board of Indirect Taxes and Customs (CBIC), to the Principal Commissioners to collect tax on gross GST amount. “Because of this, en block notices have been issued by the department for collection of interest on gross GST calculated by the adding the tax payable through ITC (input tax credit) across the region. This is causing great consternation all over the country,” said Sharad Aggarwal, president, Northern Chamber of Small & Medium Industries.

He said though the GST law committee has inserted a proviso in Section 50(1) vide the Finance Act, 2019 that interest would be chargeable on that portion of the tax that is paid by debiting the electronic cash ledger only, still it is not being implemented by the grassroots formations.

In simple terms, the interest is chargeable on net GST payable, after the deduction of input tax credit.

According to the MSMEs, there are certain anomalies and issues in the GST Act which are causing hardships and confusion among the taxpayers.

To voice their concern, representatives of the Northern Chamber of Small & Medium Industries comprising manufacturers of hand tools, auto components, valves and engineering goods recently met Minister of State for Finance and Corporate Affairs Anurag Thakur in this regard. They have sought a clarification from the government that interest, if any, is to be levied only on the net tax liability i.e. on that portion of tax only which has been paid by debiting the electronic cash ledger retrospectively from July 1, 2017.

The members also requested the minister that since GST is a new Act the interest may not be charged for the first three years of the implementation of GST provided the delay in filling of the return is not more than two months.

The representation submitted to the minister also stated that the filling of GSTR-9 had caused great confusion and complexity among the taxpayers across the country. The GST Council has been kind enough to relax several fields of the form for two years i.e. 2017-18 and 2018-19. However, for 2019-20 onwards, the return has not been simplified. GSTR-9 is an annual return to be filed once in a year by the registered taxpayers under the GST.