Impact of GST on MSME's | KSVG and Associates
GST will allow flexibility in transfer of goods across states and reduce the cost of doing business, as the reform will cut down multiple taxes imposed by states and central government.
The GST bill proposes a reduction in threshold to be Rs. 9 lakh to increase the tax net, Rs. 4 Lakh for North Eastern states. (However, GST council has increased the threshold limit from 10 lakh to 20 lakh and from 4 Lakh to 10 lakh for North eastern states) Under the reform, any service provider or retailer will be subject to tax levy. In the current central excise law threshold is Rs.1.5 crore. This reduction will significantly impact the MSMEs’ working capital. For example, a manufacturer who trades today at Rs. 25 lakhs without any tax levy will be expected to pay GST post implementation. As the threshold is low, most MSMEs are now exempted and will have to pay a chunk of their capital towards tax in future. Read more
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